U.K.'s CMA Finds Vodafone-Three UK Merger Likely To Harm Competition

(RTTNews) - The UK's Competition and Markets Authority (CMA) provisionally concluded that the proposed 15 billion pounds merger between Vodafone Limited's (VOD.L) Vodafone UK and CK Hutchison's Three UK is likely to substantially lessen competition in the U.K.

But Vodafone said in a separate statement that the company and Three UK disagreed with the CMA's provisional findings that their merger raises competition concerns and could lead to price rises for customers.

Vodafone also noted that a final decision is not due until 7 December, and the companies will continue to positively engage with the CMA and look to resolve outstanding matters.

On Friday, the CMA published provisional findings from its Phase 2 investigation into the merger. The independent inquiry group has preliminarily concluded that the merger could lead to price increases for millions of mobile customers or result in reduced service, such as smaller data packages in their contracts. There are concerns that these potential price increases or service reductions could disproportionately affect customers who are least able to afford mobile services.

According to the CMA's provisional findings, the merger could negatively affect 'wholesale' telecoms customers, such as Sky Mobile and Lebara, which depend on the existing four network operators to provide their own mobile services. With the reduction of network operators to just three, these wholesale customers might struggle to secure competitive terms and offer the best deals to retail customers.

However, the CMA said that the merger could enhance the quality of mobile services and accelerate the deployment of next-generation 5G networks and services.

In June 2023, Vodafone Group and CK Hutchison Group Telecom Holdings Limited agreed to combine their UK telecommunication businesses Vodafone UK and Three UK. On closing the transaction, Vodafone would own 51% of the combined business and CK Hutchison 49%.

In January 2024, the CMA announced that it launched its first phase of investigation into the telecom major Vodafone Group UK's combination with privately held telecom firm, Three UK.

On March 22, 2024, the CMA decided that it was or might have been the case that the merger could be expected to result in a substantial lessening of competition within one or more markets in the United Kingdom. The merger would have been referred for a phase 2 investigation unless the parties had offered acceptable undertakings to address these competition concerns.

In April 2024, the CMA referred the proposed merger between Vodafone Limited and CK Hutchison's Three UK to an in-depth investigation.