The UK’s Competition and Markets Authority (CMA) has tentatively endorsed a landmark merger between Vodafone and Three UK, proposing a novel path that may address competition concerns. This provisional approval hinges on a multi-billion pound network upgrade across the UK, including the roll-out of 5G, coupled with short-term consumer protections. This development could potentially alleviate CMA’s initial concerns about higher prices and impact on mobile virtual network operators (MVNOs) like Sky Mobile and Lyca.
In September, the CMA had raised alarms that the merger could disadvantage MVNOs and increase customer costs. Subsequently, it sought remedies to these potential issues. Recently, the CMA released a working paper to gather feedback on proposed remedies, citing that a legally binding network upgrade commitment from Vodafone and Three would enhance long-term competition in the mobile network sector.
According to the CMA, the proposed solution includes commitments from Vodafone and Three to integrate and significantly improve their network over the next eight years. This integration would be legally enforced by both the CMA and the telecoms regulator, Ofcom. Additionally, the merged entity would retain certain existing mobile tariffs and data plans for three years, providing a safeguard against immediate price hikes for consumers.
The remedy package also necessitates stable pricing terms for MVNOs, ensuring they can access favorable wholesale deals. “We believe this deal has the potential to be pro-competitive for the UK’s mobile sector if our concerns are addressed,” commented Stuart McIntosh, CMA’s inquiry group chair. He emphasized the combined impact of short-term consumer protections and the binding network commitments.
This development is still conditional, with the CMA’s final decision expected by December 7. The regulator has invited stakeholders to provide feedback by November 12. This merger has been under scrutiny since its announcement, with an antitrust investigation commencing in January. The examination aims to assess if the merger would substantially impair competition. Phase 2 of the investigation, initiated in April, enables a more detailed analysis by a panel of experts.
