The Vodafone-Three merger is expected to close during the first half of next year
The U.K.’s Competition and Markets Authority (CMA) has decided Vodafone’s merger with Three should be allowed to proceed if both operators sign binding commitments to invest billions to roll out a combined 5G network across the U.K.
In a release, the competition regulator noted that the network commitment would be supported by shorter term customer protections which would require the merged company to cap certain mobile tariffs and offer preset contractual terms to mobile virtual network operators, for a period of three years.
In September, the CMA noted that the independent inquiry group leading the in-depth Phase 2 investigation of the merger provisionally found it could lead to higher prices for customers and less advantageous terms for virtual network providers.
The group has explored how its concerns might be resolved and in November published a remedies working paper which included a range of potential remedy options.
In its final decision, the group confirmed that the proposed network commitment by Vodafone and Three, supported by shorter term protections for both retail and wholesale customers, resolve its competition concerns.
The CMA noted that the merger will therefore be allowed to proceed subject to the following legally binding commitments which require:
-Delivery of the joint network plan, which sets out the network upgrade, integration and improvements Vodafone and Three will make to their combined network across the U.K. over the next eight years. The group has concluded that the full implementation of this plan would boost competition between the mobile network operators in the long term.
-Capping selected mobile tariffs and data plans for three years, directly protecting Vodafone/Three customers from short-term price rises in the early years of the network plan.
-Offering preset prices and contract terms for wholesale services to ensure that virtual network providers can obtain competitive terms and conditions as the network plan is rolled out.
The network commitment would be overseen by both telecom regulator Ofcom and the CMA, with the merged company also required to publish an annual report setting out its progress on the implementation of the network plan. The CMA would have responsibility for monitoring and enforcing the protections relating to consumer tariffs and wholesale terms.
Stuart McIntosh, chair of the independent inquiry group leading the investigation, said: “It’s crucial this merger doesn’t harm competition, which is why we’ve spent time considering how it could impact the telecoms market. Having carefully considered the evidence, as well as the extensive feedback we have received, we believe the merger is likely to boost competition in the U.K. mobile sector and should be allowed to proceed – but only if Vodafone and Three agree to implement our proposed measures.”
In a separate statement, Vodafone and Three welcomed CMA’s decision to clear the merger.
Vodafone’s CEO Margherita Della Valle said: “Today’s decision creates a new force in the U.K.’s telecoms market and unlocks the investment needed to build the network infrastructure the country deserves. Consumers and businesses will enjoy wider coverage, faster speeds and better-quality connections across the U.K., as we build the biggest and best network in our home market.”
Last year, Vodafone Group and CK Hutchison Group Telecom Holdings had entered into binding agreements in relation to a combination of their telecommunication businesses in the U.K. Under the terms of the deal, Vodafone will own 51% of the new entity while Hutchison Group will own 49%.
Vodafone and Three had committed a total investment of £11 billion ($14 billion) in the new company. The new entity will reach 99% of the U.K. population with 5G Standalone (SA) networks. The merger is expected to be fully completed during the first half of 2025.
