BT has requested a fast track reference to Phase 2 merger review for its planned £12 billion takeover of EE. The news of the possible deal has been well received in some quarters with analysts believing the combined network will be in a good position to drive down prices to the benefit of consumers. The merger, if approved, is likely to be of significant concern to competitors as it will create the UK’s first quad-telecoms player covering mobile, TV, broadband and telephone access.
The Competition and Markets Authority (CMA) announced on the 18 May 2015 the launch of its merger inquiry by notice to BT and EE. Under UK competition law, the CMA’s statutory period for Phase 1 of the investigation is 40 working days after which a merger can be referred for more detailed Phase 2 examination if the CMA takes the view that merger may be expected to result in a substantial lessening of competition. The normal deadline for the CMA to decide whether to refer the Merger to Phase 2 investigation in this case is therefore 14 July 2015.
However in the early stages of the Phase 1 inquiry, the CMA received a request from both BT and EE for a fast track reference to Phase 2, in accordance with paragraphs 6.61 to 6.65 of the Guidance on the CMA’s jurisdiction and procedure dated January 2014. This offers a shorter end-to-end Phase 1 review period in comparison with the CMA’s usual process, as well as allowing the CMA to consider complex issues at Phase 2 without losing time on preliminaries.
It is possible to fast track a case when requested by the merging parties, in this case BT and EE, and the CMA must have sufficient evidence at an early stage that the test for reference is met. It will then have permission to skip some of the steps from the normal procedure such as an issues meeting and a case review meeting. The Phase 2 fast track procedure was last used in the case of the Thomas Cook and Co-op joint venture in 2011.
If the CMA accepts BT’s request of a fast track reference, it states that it should make a decision within the next week. Of particular note is the position the acquisition would leave Sky, BT’s rival in most spheres. It is not hard to imagine Sky watching the acquisition closely and examining any commitments or divestments BT may be required to make as part of the CMA approval process.