UK regulator refers BT-EE deal for full investigation

LONDON (Reuters) - Britain's competition watchdog said on Tuesday it had referred broadband BT's planned 12.5 billion-pound ($19 billion) takeover of mobile network operator EE for a full investigation after finding that the deal could lead to a substantial lessening of competition.

BT, which has agreed to buy EE from its owners Orange and Deutsche Telekom , had in May asked the Competition and Markets Authority (CMA) to move straight to a full Phase 2 investigation, bypassing a Phase 1 preliminary review into whether a deal might be expected to reduce competition.

Combining BT's more than 10 million retail customers and EE's 24.5 million direct mobile subscribers was always expected to be closely examined by the regulator.

"We are pleased that the CMA have agreed to our request by proceeding promptly to a phase two investigation," a BT spokesman said. "We were keen for this to happen as it should result in a shorter end-to-end review period."

EE and BT's competitors such as Vodafone and TalkTalk are expected to use the review as an opportunity to lobby for better terms for access to BT's fixed line network.

(Reporting by Kate Holton; Editing by Greg Mahlich)