OFT to Rule on Sky Takeover of O2 UK Home Broadband in May 2013

The anticipated £180m+ acquisition by BSkyB (Sky Broadband) of O2 UK and BE Broadband’s fixed line internet and phone customers (full details), which was originally due to complete by the end of April 2013 (subject to regulatory clearance), could suffer a delay.

The Office of Fair Trading (OFT), which is currently examining whether the deal complies with the merger provisions of the Enterprise Act 2002 (i.e. a regulatory test to ensure that the deal doesn’t result in a “substantial lessening of competition“), has already closed the case to new responses and now appears to have set a later “expected decision” date of 16th May 2013 (estimated).

Sadly the OFT doesn’t guarantee that clearance will be announced on or before this estimated date, which is the regulators “best up-to-date estimate” of when a decision is expected to be announced.

This means that customers might have to wait a little bit longer to find out precisely what Sky has planned (i.e. product offers) because O2/Sky aren’t likely to confirm the final details until after the OFT has given clearance, although a source close to the proceedings confirmed that there’s no dependency on having OFT approval ahead of completing the transaction.

OFT Statement (March 2013)

The transaction involves the acquisition of the fixed home broadband and telephony buisness of Telefónica UK Limited under the Be and O2 Home Broadband brands.

The Office of Fair Trading is considering whether this agreement has resulted in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

So far we haven’t seen any significant reasons why the OFT might reject the BSkyB deal. The UK is already home to a fairly competitive consumer broadband market and the O2/Sky deal isn’t likely to have much of an impact on that one way or another.

Assuming the deal is given clearance then the phased migration over to Sky’s platform, which should take a total of around 18 months to complete, is expected to get underway towards the latter part of this summer 2013. Meanwhile O2, in an attempt to secure Sky’s “extra contingent amount” of up to £20 million, are continuing to offer customers who wish to leave plenty of incentives to stay (12 months free broadband and big mobile call rebates).

Credits to several of O2’s customers for pointing the OFT date out to us.