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The CMA has begun its second phase investigation into the proposed deal, due to concerns that it could raise prices for consumers and restrict competition.
The UK’s Competition and Markets Authority (CMA) has begun an in-depth investigation into the planned merger of Vodafone and Three’s UK operations.
The investigation will look into the potential impact a merger could have on the UK market, due to concerns that the deal could impact competition for certain goods and services. This in-depth investigation has a planned end date of 18 September 2024.
Vodafone and Three first announced their plans to merge their UK operations in June of last year. With more than 27m combined users, the new entity would surge to become the biggest mobile operator in the country – ahead of BT’s EE and Virgin Media’s O2.
The two companies say this new entity would invest £11bn over 10 years to accelerate the roll-out of 5G across the UK, to the benefit of the country and its consumers. Vodafone previously claimed that a merged company would be better equipped to handle the costs of a 5G roll-out.
But last month, the CMA shared concerns that the proposed deal could result in a substantial lessening of competition in the retail mobile telecoms sector, for end consumers and wholesale mobile services in the country.
These concerns were raised after an initial 40-day investigation into the proposed merger in January, in which the CMA found that both Vodafone and Three provide “important alternatives” for mobile customers in the country.
The two companies were given five working days by the CMA to respond with “meaningful solutions” to its concerns, or face the in-depth phase two investigation.
Julie Bon, who led the decision-making for the first phase of the investigation, said that millions of people in the UK depend on effective competition in the mobile market to access the best deals for them.
“While Vodafone and Three have made a number of claims about how their deal is good for competition and investment, the CMA has not seen sufficient evidence to date to back these claims,” Bon said last month.
UK telecoms regulator Ofcom was previously outspoken against major mergers in this sector, opposing Three UK’s attempted £10.5bn takeover of 02 in 2016. This takeover was ultimately blocked by the European Commission.
But in February 2022, the regulator made a statement that appeared to soften its stance on mergers, which promoted the possibility that competitors could combine their businesses in future – a possibility that may be squashed again depending on the CMA’s verdict.
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