Merger control in the UK
A fast-track merger clearance
When Freshfields client BT announced plans to acquire mobile operator EE, it prompted one of the most extensive and controversial UK merger control reviews of recent years.
Following the announcement, the UK’s Competition and Markets Authority (CMA) received objections from a host of players in the telecoms sector, resulting in the CMA investigating 10 different lines of inquiry.
Parallel telecoms merger investigations…
One of these involved concerns that the merger could result in a substantial lessening of competition in relation to the supply of various mobile and broadband services to UK mobile virtual network and mobile network operators (MNOs).
The European Commission was, at the same time, assessing the proposed merger between O2 and Three, two other UK MNOs. If successful, this deal would have reduced the number of MNOs from four to three, making the approval of further consolidation less likely.
… meant early CMA engagement
To ensure we presented the strongest possible case to the CMA, we created a single project team made up of lawyers from Freshfields and BT, and economists from Compass Lexecon, working in a truly integrated manner.
The project team, made up of lawyers and economists, worked in a truly integrated manner.
The CMA normally assesses the implications of a deal during an initial 40-working-day ‘phase 1’ investigation, then in more detail during a six-month ‘phase 2’ of merger control proceedings.
But our 20-strong team had detailed teach-ins and discussions with the CMA even prior to commencement of the phase I review: we explained the technology, the changing market place and the pro-competitive rationale for the transaction.
We also pre-empted possible complications arising from the concurrent European Commission investigation.
We pre-empted possible complications arising from the parallel European Commission investigation into the O2 and Three merger.
Fast track to phase 2 pays off
To reduce the overall time needed for clearance, we then took the unusual step of applying for a so-called ‘fast track’ reference to phase 2, avoiding the need for a full phase 1 review as well. This evidently proved to be of strategic benefit for our client BT, as the CMA cleared the merger unconditionally, without the need for remedies.
We took the unusual step of applying for a ‘fast-track’ reference to phase II.
The merger added more than 25 million mobile customers to BT and, according to group chief executive Gavin Patterson, was ‘great news for our shareholders, our customers and for UK plc given [that] we will continue to invest and innovate’.