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U.K. telecom watchdog says Brexit is chance to strengthen M&A rules

Ofcom chief Sharon White’s comments follow the regulator’s push this week for a legal separation of BT’s Openreach

The U.K.’s exit from the European Union will create room for reinforcing M&A rules that can address loopholes and complexities missed under the European Union law, the country’s telecom and broadcasting watchdog said.

“Brexit means that some future mergers and takeovers involving U.K.-based companies would be presided over by U.K. regulators, based on domestic merger law,” Ofcom chief Sharon White said in a speech. “We have the opportunity to introduce a wider set of considerations in merger decisions, including policy or public-interest concerns where a company is deemed to have particular strategic significance for the U.K.”

White’s comments follow the communication regulator’s push this week for legally separating BT Group plc‘s infrastructure division, Openreach. While the U.K. and European competition authorities could both continue to have jurisdiction over some mergers following Brexit, Ofcom wants to introduce new rules to protect U.K. consumers.

Highlighting BT’s purchase of EE in August 2016, as well as Hutchinson 3G UK Ltd.’s attempt to buy Telefonica SA‘s O2, White pointed to a trend for “fewer, bigger players selling television, phone and broadband in packages,” and speculation about other deals.

“What about if consolidation in the sector led to a small number of big players, with concentrated power–an oligopoly?,” White said. “Here, I think we have the chance to introduce new protections. If these markets become uncompetitive, Ofcom should be able to step in to protect U.K. consumers.”

“We and other regulators made this argument to the European Commission, without success. The EU laws in this area remain unclear. We now have the opportunity to put this right in U.K. law,” White said.

The U.K. Competition and Markets Authority cleared the BT-EE deal, while the European Commission blocked the Three-O2 decision–a move that Ofcom supported.

“This is not regulatory creep. Nor is it about new powers for the sake of it,” White said. “Rather it is about ensuring that, in a rapidly evolving sector, U.K. laws protect U.K. consumers from new, anti-competitive threats.”

OfCom, established in 2003, oversees the U.K.’s telecom, broadcasting, postal and wireless services industries.

White’s speech was addressed to the Institute for Government.

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