In advance of opening an official probe regarding the proposed merger of Vodafone and Three in the UK, the Competition and Markets Authority (CMA) has invited stakeholders to provide early comments. The CMA’s intention to begin an investigation suggests a swift move towards action on its part.
The potential merger of Vodafone and Three has been a topic of discussion and speculation for months, and was finally declared in June. Such a unification was sure to stir controversy and delay from the regulatory standpoint. Not unexpectedly, the CMA’s judgement is anticipated for September 2024.
This preliminary consultation will aid the CMA with collecting evidence before launching its formal investigation. Additionally, once the preliminary phase of the investigation is initiated, it will provide further opportunities for stakeholders to share their perspectives.
Sarah Cardell, the chief executive of the CMA, elucidated, “We will be carefully considering how this deal may affect competition in the UK, which could affect the options and prices available to customers”. She further emphasized the need to assess how the deal may impact the incentives towards improving the quality of UK mobile networks.
The merging of Vodafone and Three would undoubtedly lessen the number of mobile networks in the UK from four to three. There are justified concerns over the reduction of consumer selection, possibility of price surges and the altering of virtual players in the market. Diminished competition could also mean lower motivations to improve quality or offer novel services.
Vodafone and Three were astutely proactive, identifying potential regulatory concerns from the onset, while they highlighted their ambition to bring more choice, better value to the market and increased potential for investment as a united entity. However, mere rhetoric may be insufficient to coax approval from the CMA, prompting the two telecommunications giants to explore potential solutions that could pacify the regulatory body.
The CMA’s track record includes opposition to a previous UK merger that could have reduced the number of mobile network operators to three. The important detail here is, regardless of European Commission’s charge of deciding on UK mergers, the CMA’s opposition remains significant. It remains uncertain whether industry developments have been significant enough over the years to convince the CMA that three mobile networks would suffice. This industry is rapidly evolving, and these investigative proceedings indicate its vibrancy.
