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CMA says Three & O2 merger is a Significant threat to competition |
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#1 |
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CMA says Three & O2 merger is a Significant threat to competition
The proposed merger of Three and O2 is a significant threat to competition says the CMA who are going to scrutinise the deal. Plus the EU is going to look at it too. This wont please the forum member who thought it was a done deal ![]() Quote:
“The Competition and Markets Authority’s (CMA) initial view, following consultation and preliminary analysis, is that the transaction threatens to affect significantly competition in the UK retail mobile and wholesale mobile markets. http://www.ispreview.co.uk/index.php...d-o2-deal.html
It also believes it is appropriate for the case to be referred to the CMA for investigation because any impact on competition resulting from the merger will likely be limited to UK consumers and because of the CMA’s experience in investigating telecoms mergers – as demonstrated by the CMA’s ongoing investigation into the BT/EE merger in this market. Given the clear links between these 2 cases it would be more efficient to also examine the merger between Three and O2, in particular to avoid duplication and fragmentation. The CMA also received support from industry participants in making the request.” |
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#2 |
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Join Date: Apr 2013
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Everything, that's not really correct. The CMA won't necessarily be looking at the deal and they certainly won't do it in addition to the European Commission.
What they have done is ask the EC if they can take over scrutiny of the deal. It's up to the EC as to whether they allow it. The Germans tried the same when Telefonica bought E-Plus and the German Federal Cartel Office used similar arguments to the CMA but the EC told them where to get off. There is one difference here and it's something I've posted about before and that's because the CMA is looking at BTEE, there is a certain logic in having the same organisation look at both deals as some of the decisions depend on what happens in the other. At the moment with BTEE, the CMA has to guess what the EC will decide upon with 3O2. However, the CMA's other argument about having experience in dealing with telecoms mergers is laughable when compared with the EC. But for me, the EC's biggest advantage is that they are far more likely to do a competent job when compared with the CMA. It already looks like BT have run rings around the CMA. |
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#3 |
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My first thought was; what about the BT/EE deal?
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#4 |
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But the merger haso already started. Three have started bringing their 3G speeds down to O2 levels.
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#5 |
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Join Date: Mar 2013
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As Ja says this will likely not be decided by the CMA and the attitude has changed in the EC since the Ireland and Germany Mergers were allowed. They want to keep competition high and something like this specially with how Three has been lately doesn't scream competition to me.
With the fallout of the Liberty Global/Vodafone Asset swaps. Vodafone is going need this deal to fail least if they had gotten virgin media they would of had a solid backhaul and fixed line network then even being the smallest wireless network in UK. Now there only option really is to try and build there own fixed line network to compete with BT like they are rebuilding there Wireless Network in UK. They have been aiming to do that across Europe Spain and Germany and Italy being good examples. It will be interesting if they willing sink the capital required to build there own fixed line network into the UK though both Telewest and NTL went bust trying do the same. Expect once the CMA and Ofcom decide upon what is happening to BT later this year early next we will hear there plan. They will surely know just offering FTTC isn't going build there fixed line subscriber base specially with Sky and Talktalk building a FTTP City Pilot project. |
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#6 |
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Quote:
But the merger haso already started. Three have started bringing their 3G speeds down to O2 levels.
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#7 |
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Overall there was a feeling that these deals would simply be rubber stamped has proved to be wrong. While the deals my be allowed I would anticipate there will be significant concessions required that may make the deal not worth pursing.
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#8 |
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Quote:
Overall there was a feeling that these deals would simply be rubber stamped has proved to be wrong. While the deals my be allowed I would anticipate there will be significant concessions required that may make the deal not worth pursing.
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#9 |
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Quote:
My first thought was; what about the BT/EE deal?
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#10 |
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Quote:
Expect once the CMA and Ofcom decide upon what is happening to BT later this year early next we will hear there plan. They will surely know just offering FTTC isn't going build there fixed line subscriber base specially with Sky and Talktalk building a FTTP City Pilot project.
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Overall there was a feeling that these deals would simply be rubber stamped has proved to be wrong. While the deals my be allowed I would anticipate there will be significant concessions required that may make the deal not worth pursing.
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Don't forget the BT EE deal is significantly different in that it isn't a mobile network taking over another mobile network, it is just a company buying a mobile network which will continue as it is, just with a new owner. I doubt the authorities will view the deals in the same way.
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#11 |
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Ofcoms's Sharon White has concerns about consolidation in the mobile market namely Three and O2 however hints the the BT / EE deal might be dealt with regulation. Interestingly Ofcom aren't happy that BT Openreach is not fully separated from BT Retail with shared IT systems as required by regulation. Quote:
"The Commissioner pointed to research suggesting that a reduction in the number of players from four-to-three in a national mobile market in the EU can lead to higher prices for consumers, but not more investment per subscriber.” http://www.ispreview.co.uk/index.php...ng-prices.htmlOnly when companies cannot make an adequate return – because competitive pressure is so intense – might we expect investment to suffer. The evidence suggests this is not the situation in the UK mobile market, which last year generated £15 billion of revenue. Even at a time when UK operators are investing billions to roll-out 4G, they are maintaining a healthy average cashflow margin of more than 12 per cent.” http://www.ispreview.co.uk/index.php...ertakings.html |
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#12 |
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I'm not sure anyone thought the Three/O2 deal would be quick or easy. Far from it, even when it was first talked about I think it was assumed it would be 18-24 months before anything really happened that a consumer would notice.
I still think that Europe will decide three networks is sufficient competition, and it will be approved. So far everyone is sticking to their guns, and will do so until they can get the relevant compromises. Three/Hutchison will likely give up some spectrum or whatever else they're asked to do, and everyone will go away happy and claim they 'won'. |
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#13 |
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Quote:
I'm not sure anyone thought the Three/O2 deal would be quick or easy. Far from it, even when it was first talked about I think it was assumed it would be 18-24 months before anything really happened that a consumer would notice.
I still think that Europe will decide three networks is sufficient competition, and it will be approved. So far everyone is sticking to their guns, and will do so until they can get the relevant compromises. Three/Hutchison will likely give up some spectrum or whatever else they're asked to do, and everyone will go away happy and claim they 'won'. |
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#14 |
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Quote:
Agree with Jon. I suspect 3O2 will have to hand over some 800 to EE who are a little short in that department. I see it as a good thing. We would then have 3 networks, each with a good range of spectrum and capacity and that has to be good for the consumer at the end of the day. At the moment, 3 and O2 are looking a bit like lame ducks.
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#15 |
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What makes you feel that giving 2 X 5MHz to EE is a good idea. If Three is to maintain All you can eat data, it's going to need all the spectrum it can have. EE doesn't need more 800MHz as its 2G 1800MHz fallback is sufficient. Three is a data heavy network and 2 X 15MHz at 800MHz still won't be sufficient for indoors coverage. Swapping it for 2.6GHz won't help. Three/O2 will have 30 million customers spread over limited spectrum will make them struggle. Saying all this, I doubt this buyout will be approved.
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#16 |
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I can imagine all sorts of games. Maybe Three will have to sell some spectrum, and then later it will be able to buy some more..
It will of course be arguing that the combined numbers of users, it needs a certain level of spectrum and I'm sure Hutchison will have a suitable well equipped legal team to push that point. I think every UK network needs as much spectrum as it can get. To be competitive, it should be competing on price and service, so having a network restricted reduces competition and means you can have one network ending up way ahead of the pack and able to maintain premium pricing. Just as we've got right now. |
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#17 |
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Quote:
What makes you feel that giving 2 X 5MHz to EE is a good idea. If Three is to maintain All you can eat data, it's going to need all the spectrum it can have. EE doesn't need more 800MHz as its 2G 1800MHz fallback is sufficient. Three is a data heavy network and 2 X 15MHz at 800MHz still won't be sufficient for indoors coverage. Swapping it for 2.6GHz won't help. Three/O2 will have 30 million customers spread over limited spectrum will make them struggle. Saying all this, I doubt this buyout will be approved.
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I can imagine all sorts of games. Maybe Three will have to sell some spectrum, and then later it will be able to buy some more..
It will of course be arguing that the combined numbers of users, it needs a certain level of spectrum and I'm sure Hutchison will have a suitable well equipped legal team to push that point. I think every UK network needs as much spectrum as it can get. To be competitive, it should be competing on price and service, so having a network restricted reduces competition and means you can have one network ending up way ahead of the pack and able to maintain premium pricing. Just as we've got right now. |
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#18 |
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Is there any chance that Vodafone which would become the smallest network could get the 5MHz of 800? That would give them 15MHz of 800, 20Mhz of 1440, 5MHz of 1800, 15Mhz of 2100 I think and whatever 2600 they have. I wonder if Voda had to choose between BT's 2600 spectrum and 5 extra MHz of 800 which one they'd do.
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#19 |
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Quote:
Is there any chance that Vodafone which would become the smallest network could get the 5MHz of 800? That would give them 15MHz of 800, 20Mhz of 1440, 5MHz of 1800, 15Mhz of 2100 I think and whatever 2600 they have. I wonder if Voda had to choose between BT's 2600 spectrum and 5 extra MHz of 800 which one they'd do.
I would be surprised if it wasn't told to be sold to EE if it was forced off them as EE have only 2x5MHz low band. Vodafone has nearly 2x30MHz lowband. |
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#20 |
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Looking at the spectrum ranges each network has, I should think it unlikely 3/O2 would be forced to divest spectrum, given the combination of the two makes it comparable to EE and Vodafone. In respect of the BT/EE deal its almost a certainty they will have to divest 2600, which would be anyones for the taking, we may see UK Broadband Ltd snapping that up (given their customer base is primarily in urban settings).
Theres a Tri-Factor of interests which will determine the success of 3/O2 merger; regulators, government and consumer groups. I know people may think the latter don't have much influence, however they do have statutary functions which allows them to refer companies to the relevant regulators for competition and customer concerns. I still see the deal struggling to get off the ground, if they can get one domestic regulator on board, then there is a possibility it may succeed. So far two regulators have preliminary come out in opposition to the deal, in so far competition would be reduced. As we all know the Government in recent years has tasked OFCOM with raising spectrum licence costs and bringing in more money for the treasury, given the auctions gave less than expected. Do you think the Government would be happy potentially bringing less revenue with combined networks? I know the Tories are pro-business and all that, but even they wouldn't stand for that. Parliament has just started sitting again this week, look out to some of the select committees scrutinising the deals, should give a flavour of parliament opinion. There are a lot of unknowns (I could've done a Donald Rumsfeld there), but surely if domestic opinion is against it the deal won't fly? There isn't a lot of compromises 3/O2 can do given they don't have as much spectrum or infrastructure as EE and Vodafone. Just wait for parliamnentary opinion and that of the Government, if they are against it, its dead in the water, there ain't no busy body in Brussels that will overrule that. |
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#21 |
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Quote:
In respect of the BT/EE deal its almost a certainty they will have to divest 2600
In it's initial assessment, the CMA didn't even realise the combined spectrum holding was an issue they should look at which shows their level of competence. They are looking at it now the others said WTF. Ofcom have weighed in and almost said it doesn't matter either as the other networks can compensate in other ways which at the very least is inconsistent with their previous ideas on caps and way they designed auctions. I suspect their views have been managed by BT as BT invest heavily in outsmarting the regulator given how vital it is to their business. The talented people gain the necessary experience at Ofcom understanding how it works and what it looks for and then take the money on offer from BT leaving the rest at Ofcom. |
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#22 |
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CMA not looking at the spectrum holding? That sounds like they've not got industry specific people analysing the unique nature of the merger? Or was it just an oversight?
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#23 |
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They are now but they missed it in their initial statement of what they thought the issues were which shows their level.
That's why it's better the EC deal with 3O2. The CMA have applied to take over from the EC but it's up to the EC as to whether they allow it. |
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#24 |
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I can't understand when you get the post from the odd person making out thisnos good for competition. How? Less players in the market leads to more price matching and staus quo like were starting to see now.
From a consumer point of view more is best. I think some people are 3 or o2 customers and just "hope" this deal means better coverage for them. It may do, it may not do. That is probably more uncertain than the lack of competition that will come into the market. I hope and suspect this deal will be blocked. Keeping more networks is best for the customer and increases choice all round. |
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#25 |
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I don't think we'll ever see networks not sticking together and effectively operating like a cartel. If one introduces a new charge, they all follow.
But that doesn't mean there isn't still some competition on tariffs. The problem with loads of networks is that some might end up not being very good, and as such aren't a good choice regardless of price. Having fewer networks that are all fairly equal now means you can consider all of them. Frankly, three networks and countless MVNOs means I think we've got plenty of choice and won't be any worse off. Or better. It will be pretty much the same. |
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