Vodafone and Three: CMA investigating proposed merger

Would cut major network operators from four to three

The Competition and Markets Authority (CMA) is seeking feedback about the coming merger between Vodafone UK and Hutchison-owned Three, before it launches a formal investigation.

The antitrust regulator said it would offer a platform for stakeholders to share their views on the potential impact the merger could have on competition within the UK.

The CMA will accept comments from interested third parties until 1st November, but has not yet when it will launch Phase 1 of its inquiry into the merger.

Stakeholders will have additional chances to submit their views once it begins its investigation.

"Millions of consumers and businesses in the UK rely on Vodafone's and Three's mobile networks to stay connected," said Sarah Cardell, chief executive of the CMA.

"We will be carefully considering how this deal may affect competition in the UK, which could affect the options and prices available to customers. We will also assess how it may affect incentives to invest in the quality of UK mobile networks.

"This is an opportunity for those with an interest in this merger to let us know their views before we launch a full investigation.

The CMA emphasised that, according to legal requirements, it is not permitted to take into account other potential consequences that a merger could bring about, such as impacts on employment or access to personal data.

It further noted that any national security concerns would fall within the purview of the UK government. The government could opt to intervene under the National Security and Investment Act.

Historic antitrust

Vodafone and Three are among the four major mobile operators in the UK, along with BT's EE network and Virgin Media O2.

In June this year, Vodafone UK and Three announced their intent to merge in a non-cash agreement, forming a massive mobile operator valued at £15 billion, with approximately 28 million subscribers.

Under the proposed merger, Vodafone would hold a 51% stake, with Hutchison owning the remaining 49%.

The newly formed company has committed to an £11 billion investment over the course of a decade, primarily to speed the deployment of 5G technology across the UK. Vodafone claims that a merged entity would be better positioned to manage the financial demands associated with a widespread 5G rollout.

In 2016, the European Commission blocked a proposed merger between Three UK and Telefonica's O2 in Britain. The reasoning was that reducing the number of major networks from four to three was likely to diminish competition and lead to higher prices for consumers.

Nothing appears to have changed in that regard, but the Commission no longer has a say on UK antitrust.