CMA raises concerns about proposed Vodafone-Three merger

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The Competition and Markets Authority (CMA) has expressed concerns over the proposed merger between Vodafone and Three, two of the UK’s four major mobile network operators.

The regulator launched its initial Phase 1 investigation in January after the two companies announced a joint venture agreement last year that would combine their 27 million customers under a single network provider.

The CMA’s 40-day Phase 1 review aimed to identify whether the deal could lead to a “substantial lessening of competition” and potentially harm consumers and businesses in the UK. After its initial investigation, the CMA has raised concerns that the merger, which would combine two of the four mobile network operators, could result in higher prices and reduced quality for mobile customers.

According to the CMA, Vodafone and Three are important alternatives for mobile customers; with both companies having made significant investments in their networks in recent years, including the rollout of 5G. Three is also generally the cheapest of the four mobile network operators.

The regulator is concerned that combining these two businesses could reduce rivalry between mobile operators, potentially leading to higher prices and less incentive for network operators to improve their services and invest in network quality.

Additionally, the CMA is worried that the deal might make it difficult for smaller mobile virtual network operators (MVNOs), such as Sky Mobile, Lebara, and Lyca Mobile, to negotiate favourable deals for their customers by reducing the number of mobile network operators capable of hosting these virtual networks.

While Vodafone and Three claimed that combining their businesses would result in significant benefits to customers and speed up the deployment of new technologies, the CMA considers that these claims need more detailed assessment—particularly given the regulator’s concerns about the potential reduction in incentives for overall network investment.

Julie Bon, the Phase 1 decision-maker for this case at the CMA, said: “Millions of people in the UK depend on effective competition in the mobile market in order to access the best deals for them. Whilst 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.”

Vodafone and Three have five working days to respond with meaningful solutions to the CMA’s concerns. If they fail to do so, the deal will be referred to a more in-depth Phase 2 investigation.

“Our initial assessment of this deal has identified concerns which could lead to higher prices for customers and lower investment in UK mobile networks. These warrant an in-depth investigation unless Vodafone and Three can come forward with solutions,” concludes Bon.

(Photo by Markus Winkler)

See also: Government programme boosts 4G coverage in rural Wales

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