British Watchdog Raises Concerns about Vodafone – 3 UK Deal

The UK’s Competition and Markets Authority (CMA) plans to launch the second phase of the investigation into a proposed tie-up of Vodafone UK with 3 UK. The probe will not start if the companies provide meaningful solutions to concerns related to the deal.

Vodafone and 3 have five working days from today to respond to the CMA’s concerns, following an initial assessment which found the deal could lead to higher prices for customers and lower investment in mobile networks. “These warrant an in-depth investigation unless Vodafone and 3 can come forward with solutions,” the CMA stated.

The CMA launched its phase one investigation in January, conducting a 40-day review to identify if the deal may lead to a substantial lessening of competition. It explained the initial probe found Vodafone and 3 each provide important alternatives for mobile customers and had made significant investments in their networks over the years, including in the rollout of 5G.

The authority noted a concern the combination would reduce rivalry among operators to win new customers, decrease motivation to keep prices low, and lessen the incentive to improve networks. It also raised concerns the merger may make it difficult for smaller MVNOs including Sky Mobile, Lebara, and Lyca Mobile to negotiate good deals for their own customers.

The CMA further acknowledged that when first announcing the deal, Vodafone and 3 claimed they would provide significant benefits to customers and speed deployment of new technologies. However, it added the claims were based on several assumptions post-merger and it now requires a more detailed assessment.