The CMA has confirmed its provisional approval of the proposed Vodafone-Three merger, provided it meets certain conditions. Though the watchdog’s probe into the deal initially concluded that the creation of such a company could lead to reduced competition in the British telecoms market, the CMA said it could go ahead if it included short-term customer protections and a commitment by the new company to substantial network upgrades. It added that it had published a Remedies Working Paper to solicit views on the effectiveness of its proposals.
“We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are addressed,” said the chair of the CMA’s inquiry group into the merger, Stuart McIntosh. A legally binding commitment to upgrade the new network that resulted from any fusion of Vodafone and Three was likely, McIntosh added, to “boost competition in the longer-term [while] additional measures would protect consumers and wholesale customers” during said upgrades.
Vodafone-Three merger can move ahead if it meets CMA conditions
The CMA’s conditions for approving the proposed Vodafone-Three merger include the delivery of their joint network plan, which calls for significant upgrades to their network over the next eight years. This, added the regulator, would be guaranteed by a legal commitment from the new firm, which in turn would be monitored by Ofcom and the CMA. Additionally, the company that resulted from the merger would have to retain existing customer mobile tariffs and data plans for three years to protect consumers from short-term price fluctuations.
Today’s announcement – which the CMA has said remains provisional until a final decision is reached on 7 December – follows an 11-month inquiry by the regulator into the possible competition implications arising from a Vodafone-Three merger. Though seemingly sceptical at first, the watchdog appears to have been won over not only by Vodafone and Three’s willingness to substantively engage with the regulator. This included Vodafone’s agreement to sell a portion of its spectrum to Virgin Media O2 in case the merger proceeded, and its willingness to create a ‘National Security Committee’ to oversee any sensitive post-merger projects in the public sector – the latter step winning it provisional security approval from the Cabinet Office.
Deal now over two years in the running
Talks between Vodafone and Three to merge their businesses began in October 2022. Both companies argued that such a deal would not only lead to new internal efficiencies but also expedite the rollout of 5G across the UK, a potentially difficult task given the high levels of investment required by such an upgrade. The proposed merger would have also led to the creation of the country’s largest telecoms provider, commanding 27m customers and 46% of the entire UK mobile spectrum.
Vodafone and Three’s joint response to the CMA’s announcement today was cautiously optimistic. Both companies “will need to study the Working Paper in detail,” both firms said in a statement. Nevertheless, “from what the CMA has communicated so far, the companies believe it provides a path to final clearance.”
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