Image: © DisobeyArt/Stock.adobe.com
The CMA has found that a legally enforceable network upgrade as well as price freezing could solve its competition concerns.
The UK competition watchdog has today announced (5 November) that the Vodafone-Three merger could potentially go ahead if the merged entity agrees to a multibillion-pound commitment to upgrade its network across the UK as well as retain prices in the short term for customers and mobile virtual network operators (MVNO).
The Competition and Markets Authority (CMA), in its provisional findings in September said that the merger could lead to higher prices for customers as well as reduced services and harm the position of MVNOs (wholesale telecoms customers that rely on existing network operators to provide their services) such as Sky Mobile, Lyca, Lebara and iD Mobile.
The inquiry also found that while that the merger could improve the quality of mobile networks and the deployment of 5G networks – it also considered that they could be overstated.
However, in its provisional remedies working paper today, the competition watchdog’s independent inquiry group found that a legally binding commitment to undertake an eight-year network upgrade as proposed by Vodafone and Three, retain prices on existing mobile tariffs and data plans for at least three years as well as committing to pre-agreed prices and contract terms for MVNOs could solve the CMA’s concerns regarding the merger.
According to the CMA, the proposed network integration and investment programme would “significantly” improve the quality of the merged company’s mobile network, boost competition between mobile network operators in the long term and benefit millions.
“A legally binding network commitment would boost competition in the longer term and the additional measures would protect consumers and wholesale customers while the network upgrades are being rolled out,” said Stuart McIntosh, the chair of the inquiry group leading the investigation.
“We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are addressed.”
Vodafone and Three first confirmed talks of a merger of their UK operations in October of 2022.
“By combining our businesses, Vodafone UK and Three UK will gain the necessary scale to be able to accelerate the roll-out of full 5G in the UK and expand broadband connectivity to rural communities and small businesses,” Vodafone said back in 2022.
The two companies disagreed with the CMA’s provisional findings in September regarding the £15bn merger, stating that it “is a catalyst for change” and will bring the “best-in-class 5G to every school and hospital in the country”.
The two parties said they believed the merger is “pro-competitive” and tabled remedies including the £11bn network investment programme and committed to maintaining tariffs at £10 or below for two years for certain customers.
CMA’s inquiry group is inviting feedback until 12 November and a final decision will be made by 7 December.
Don’t miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic’s digest of need-to-know sci-tech news.
