The regulator said it will announce its final decision on the Vodafone-Three merger on December 7
The U.K.’s Competition and Markets Authority (CMA) has provisionally found that a multi-billion-pound commitment to upgrade the network of the new entity resulting from the merger of local carriers Vodafone and Three UK across the country, including the rollout of 5G, combined with short-term customer protections could solve competition concerns identified by the regulator in September and allow the merger to go ahead.
The CMA investigation provisionally found in September that the merger could lead to higher prices for customers and harm the position of mobile virtual network operators, such as Sky Mobile, Lyca, Lebara and iD Mobile. The CMA also consulted on potential solutions to address its concerns – known as remedies.
The CMA has now published a remedies working paper to seek views on the effectiveness of a proposed remedy package. It provisionally finds that a legally binding commitment to undertake the network integration and investment program proposed by Vodafone and Three would significantly improve the quality of the merged company’s mobile network, boosting competition between mobile network operators in the long term.
The CMA also found that short term protections would be needed to ensure that retail consumers and mobile virtual network operators can continue to secure good deals during the initial years of network integration and investment rollout.
The remedies proposed by the regulator would require Vodafone and Three to:
-Deliver their joint network plan – which sets out the network upgrade and improvements they will make through significant levels of investment over the next eight years across the U.K. This would be a legal obligation overseen by both telecoms regulator Ofcom and the CMA
-Commit to retain certain existing mobile tariffs and data plans for at least three years, protecting millions of current and future Vodafone/Three customers from short-term price rises in the early years of the network plan
-Commit to pre-agreed prices and contract terms to ensure that MVNOs operators can obtain competitive wholesale deals
Stuart McIntosh, chair of the inquiry group leading the investigation, said: “We believe this deal has the potential to be pro-competitive for the U.K. mobile sector if our concerns are addressed.
“Our provisional view is that binding commitments combined with short-term protections for consumers and wholesale providers would address our concerns while preserving the benefits of this merger. 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,” he said.
CMA also noted that this announcement is provisional, with a final decision due before the December 7 statutory deadline. The inquiry group is also inviting feedback on this announcement by November 12.
The CMA launched the initial phase of an antitrust investigation in January this year after the entity was notified by the two mobile operators about the proposed merger. This initial review is designed to identify whether the deal may lead to a “substantial lessening of competition” and therefore requires an in-depth, phase 2 investigation. Phase 2 investigations, which started in April, allow an independent panel of experts to probe in more depth initial concerns identified at phase 1, the CMA previously explained.
In May, the U.K government released a “publication of notice of Final Order” that provisionally approves the merger, subject to certain conditions.
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%.
