CMA probes Vodafone, Three merger
January 26, 2024
The Competition and Markets Authority (CMA) has launched an investigation into the proposed merger between Vodafone and Three.
The UK’s competition watchdog will assess whether the deal could harm consumers by leading to reduced choice or higher prices. The investigation follows an October 2023 consultation which provided an early opportunity for interested third parties to comment on the impact of the proposed deal.
Sarah Cardell, the chief executive of the CMA, said: “This deal would bring together two of the major players in the UK telecommunications market, which is critical to millions of everyday customers, businesses and the wider economy.”
“The CMA will assess how this tie-up between rival networks could impact competition before deciding next steps. We now have 40 working days to complete this formal Phase 1 investigation, before publishing our findings and any next steps,” she added.
The combined group would be the UK’s biggest mobile network with around 27 million customers. The two companies stated the deal would result in an additional investment of £11 billion (€10.1bn) in the UK.
“We strongly believe that the proposed merger of Vodafone and Three will significantly enhance competition by creating a combined business with more resources to invest in infrastructure to better compete with the two larger converged players,” commented Ahmed Essam, Vodafone UK chief executive.
“Thanks to this transaction, 95 per cent of the population and every school and hospital will be covered by standalone 5G by the end of the decade,” said Robert Finnegan, Three UK chief executive. “We are confident that this transaction will deliver significant benefits to our customers, the country and competition, and we look forward to working closely with the CMA as they review our notification.”
However, the Unite union has estimated bills could rise by as much as £300 per year if the merger goes ahead, reports the BBC.
Paolo Pescatore, analyst at PP Foresight, said the merger “makes sense”, but he expected the firms to make some concessions.
“The entity would have to provide solutions on areas like network sharing, rather than create another problem for the market,” Pescatore said. “While a precedent has already been set following the failed Three/O2 deal, let’s see if the authorities have a change of heart. Both parties need to demonstrate that this is genuinely in the interest of UK plc, the economy, and consumers for it to have a chance of getting over the line.”
The CMA has asked third parties to submit their views on the planned merger, and how it could affect competition.