The Competition and Markets Authority (CMA), the United Kingdom’s antitrust watchdog, has initiated a comprehensive examination into the proposed $19 billion merger between Vodafone’s UK operation and CK Hutchison’s Three UK.
This investigation aims to assess whether the merger would substantially diminish competition in the UK’s mobile telecommunications market.
Vodafone has almost 18 million smartphone customers on its mobile network in the United Kingdom, its home market. Three is the fourth-largest mobile network operator in the United Kingdom, with about 10.3 million mobile subscribers as of May 2023.
The merger, announced in June, would create the UK’s largest mobile operator, consolidating the existing players into three major networks. Currently, the mobile network operators in the UK include Vodafone UK, Three UK, BT’s EE, and Virgin Media O2.
The CMA has called for comments and input from interested parties regarding this significant deal. The regulatory body is in the information-gathering phase before officially commencing a formal Phase 1 investigation in the coming months. This initial phase must be completed within 40 working days. If indications of reduced competition emerge, the CMA will launch a more extensive investigation lasting 24 weeks.
Reducing the number of networks from four to three challenges a long-standing regulatory tenet that suggests maintaining four major players in significant markets helps to keep prices competitive for consumers.
This perspective was notably upheld in a decision by the European Commission in 2016 when a proposed merger between Three UK and Telefonica’s O2 in Britain was blocked, citing concerns about reduced competition and the potential for higher prices, Reuters news report said.
In response to concerns and to gain approval for the merger, Vodafone and Three UK have committed to investing a substantial £11 billion ($13.5 billion) to create a cutting-edge standalone 5G network in Europe. Their objective is to garner support from politicians, unions, and competition authorities.
Sarah Cardell, Chief Executive of CMA, stated, “We will be carefully considering how this deal may affect competition in the UK, which could affect the options and prices available to customers. We will also assess how it may affect incentives to invest in the quality of UK mobile networks.”
Vodafone has expressed its active engagement with the CMA and has welcomed the involvement of third parties in providing their perspectives. A spokesperson for Vodafone emphasized the potential benefits, stating, “We want to build one of Europe’s leading 5G networks and believe the combination of Vodafone UK and Three UK will be great for customers, the country, and competition.” The outcome of the CMA’s investigation will significantly shape the future of the telecommunications landscape in the United Kingdom.