BT's TalkTalk rescue faces scrutiny as CMA serves interim order
The UK Competition & Markets Authority has served a pre-emptive action order in relation to the acquisition by BT Group PLC of TalkTalk Telecommunications Ltd and PlatformX Communications Ltd.
A pre-emptive action order is an interim legal measure used by the CMA during merger reviews to prevent companies from taking steps that could undermine the regulator's ability to impose remedies while it investigates a completed transaction.
The CMA said on Wednesday that it served the order on British Telecommunications, parent company BT Group PLC, TalkTalk and PlatformX on Tuesday under the Enterprise Act 2002. The regulator said the text of the order will be published in due course.
The move comes after the UK government on Monday instructed the CMA to investigate BT's acquisition of TalkTalk and PlatformX on competition and public interest grounds.
Secretary of State for Digital, Culture, Media & Sport Lisa Nandy issued a public interest intervention notice concerning the completed transaction, citing the existing public interest ground of a public health emergency and a proposed new ground covering the prevention of disruption to public services, critical national infrastructure and supplies to customers who are or may be vulnerable.
The CMA must submit a report to Nandy by 1700 BST on October 19. It will assess whether the transaction has created a relevant merger situation and, if so, whether it has resulted or could result in a substantial lessening of competition in any UK market.
The report will also provide advice relevant to whether the deal should be referred for a phase two assessment and summarise representations received on the public interest considerations.
The CMA is accepting comments from interested parties on competition and public interest issues until Friday.
BT announced on Monday that it had acquired TalkTalk and PlatformX out of administration, saying the deal was undertaken "in the public interest, to protect customers and critical national infrastructure" following an unsuccessful sale process.
TalkTalk provides home broadband and phone services in the UK, while PlatformX provides internet connectivity services to other telecommunications providers. BT's Openreach is a network infrastructure supplier to TalkTalk.
BT expects the acquisitions to have a total cash impact of around £400 million in financial 2027, including consideration, transaction and administration costs, working capital effects, a £60 million trading loss for the remainder of the financial year and the non-receipt of £100 million otherwise due to Openreach.
BT has said it expects the acquisition to become value accretive over time as TalkTalk is stabilised and synergies are realised.
During the regulatory review, BT and TalkTalk will continue to operate separately.
BT shares were 1.4% higher at 198.00 pence in London on Wednesday.
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