An in-depth investigation carried out by the CMA has identified competition concerns related to the planned Vodafone-Three merger
U.K. carriers Vodafone and Three reiterated opposition with the country’s Competition and Markets Authority (CMA)’s provisional findings regarding their proposed merger, stating that the transaction is pro-competitive.
“The companies disagree with the CMA’s provisional findings, arguing that the merger will foster growth, benefit customers, encourage investment and enhance competition in the U.K. They view this as a unique opportunity to modernize the U.K.’s digital infrastructure with a planned £11 billion ($14.6 billion) investment in the network,” the pair said in a release.
Vodafone and Three noted they are actively engaging with the CMA and remain optimistic about securing approval. Their response to the CMA’s remedies notice includes several additional commitments aimed at addressing the concerns raised.
The companies claimed to make several additional commitments, which address the issues the CMA had raised around the retail and wholesale segments of the market.
The pair noted that retail customers will maintain tariffs at £10 or below for two years after the merger for value-conscious customers on the SMARTY brand, while wholesale customers will get a reference proposal to encourage MVNOs to leverage their expanded network capacity and offer competitive deals to retail consumers.
“This merger is seen as a game-changer for U.K. connectivity, bringing world-class 5G to every school and hospital, and significantly improving the U.K.’s digital infrastructure. This, in turn, will benefit businesses, the public sector, and drive the country’s technological and economic progress,” the carriers said.
In their upcoming response to the CMA’s provisional findings, Vodafone and Three said they will lay out in detail why the merger will promote growth, enhance customer experiences, encourage investment and foster competition.
The CMA’s final decision on the merger is expected on December 7.
Last month, an in-depth investigation carried out by the CMA has identified competition concerns related to Vodafone’s planned merger with Three.
The investigation, led by an independent inquiry group, has provisionally concluded that the Vodafone-Three UK merger would lead to price increases millions of mobile customers in the U.K., or see customers get a reduced service such as smaller data packages in their contracts. The CMA also said that it has particular concerns that higher bills or reduced services would negatively affect those customers least able to afford mobile services as well as those who might have to pay more for improvements in network quality they do not value.
The regulator has also provisionally found that the merger between Vodafone and Three would negatively impact MVNOs because it would reduce the number of network operators from the current four to three making it more difficult for MVNOs to secure competitive terms for their offerings.
As a result, the CMA has provisionally concluded that the merger would lead to a substantial lessening of competition in the U.K. in both retail and wholesale mobile markets.
The body outlined various remedy options it is set to investigate. These include “binding investment commitments overseen by the sector regulator, and measures to protect both retail customers and customers in the wholesale market”.
The CMA also said it will retain the option to prohibit the merger should it conclude that other remedy options will not address its competition concerns effectively.
Last year, Vodafone UK, which is owned by Vodafone Group and Three UK, owned by CK Hutchison Holdings, had announced a new joint venture agreement that would bring their operations under a single network provider. Under the terms of the proposed merger, Vodafone will own 51% of the new entity while Hutchison Group will own 49%.
