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15 November 2019

Would Labour’s plans to nationalise BT Openreach be legal under EU rules?

Nothing in EU rules prohibits nationalisation - they do however have implications for how you run nationalised and privatised services alike.

By Stephen Bush

Would Labour’s plans to nationalise BT Openreach fall foul of the European Union’s competition rules? That’s the question being asked by some of our readers and pushed by the Conservatives.

The answer is “well, it depends on what they want to do with it afterwards”. There is nothing in the EU’s rules – or in the level playing field commitments that any meaningful free trade agreement with the EU would require – that prevents a government taking Openreach, or any other bit of the economy, into public hands. It does however, place limitations on how you could run Openreach, or any other bit of the economy, in public hands.

While the proposals on what Labour would actually do with Openreach aren’t as detailed as I would like, they look to be planning to run Openreach effectively in the same way the government currently runs railway tracks and roads – in which the government provides, maintains and develops rail and road, but private cars, trains, trucks and lorries roll over them – which wouldn’t fall foul of level-playing field rules.

If you had a situation in which the day-to-day running of Openreach made it impossible for other broadband providers to operate, then that could open a future government up to a court challenge under the rules of the single market or under any free trade agreement with the European Union. But this wouldn’t force the government to sell off Openreach, just to tweak it

As I wrote this morning, while we can assess and reach a firm judgement one way or the other on the desirability of free at the point of use broadband, we can’t be as clear about the value of nationalising Openreach – at a cost of £20bn according to Labour, and perhaps more according to BT itself – until we have a better idea of how Labour proposes to run Openreach.

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Equally, until we have that detail, we can’t say with any confidence what it would mean for the future institutional relationship with the EU that a Labour government would be able to tolerate.

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