Competition and Markets Authority (CMA) begins Phase 1 investigation of Vodafone UK’s merger with Three UK
The Competition and Markets Authority (CMA) has begun an official investigation of the merger between Vodafone UK and Three UK.
The CMA confirmed that the phase one investigation will examine the potential impact the proposed deal could have on competition for UK consumers and businesses.
It was back in June 2023 when Vodafone UK and the Chinese owner of Three UK (CK Hutchison) had finally agreed the long touted merger of their UK mobile operations. The deal combines the companies’ telecommunications operations under one single network provider.
Phase One investigation
The merger had been an open secret until that time, after talks between the two began in 2022 to create the largest mobile operator in the United Kingdom.
The transaction would result in Vodafone having a 51 percent stake of the combined business, leaving CK Hutchison with the minority stake.
The CMA on Friday said that having now received the required pre-notification evidence and information from both Vodafone UK and Three UK, as well as early views from stakeholders, it is starting its formal phase one investigation.
The CMA said it now has up to 40 working days to assess the deal as part of a Phase 1 investigation. This review is designed to identify whether the deal may lead to a ‘substantial lessening of competition’ and – if so – whether a more in-depth Phase 2 investigation is required.
“This deal would bring together two of the major players in the UK telecommunications market, which is critical to millions of everyday customers, businesses and the wider economy,” Sarah Cardell, chief executive of the CMA.
“The CMA will assess how this tie-up between rival networks could impact competition before deciding next steps,” said Cardell. “We now have 40 working days to complete this formal Phase 1 investigation, before publishing our findings and any next steps.”
The CMA is currently inviting views by 9 February 2024 on how the merger could affect competition.
If the CMA finds the merger could lead to a substantial lessening of competition, then it can refer it for a more in-depth Phase 2 merger investigation.
Vodafone has undergone a number of changes in the past year.
In November last year Vodafone said it would sell Vodafone Spain to Zegona for $5.3 billion (£4.4bn).
This was another strategic move by Vodafone’s new chief executive officer Margherita Della Valle, who had been confirmed in the top role in April 2023 after former CEO Nick Read announced December in 2022 he was stepping down.
In May 2023 Vodafone also confirmed it would axe 11,000 jobs.
The merger between Vodafone’s UK business and Three UK will reduce the number of mobile operators in the UK to just three, hence the CMA investigation.
That deal however was blocked by regulators in May 2016, after both the UK Competitions and Markets Authority (CMA) and Ofcom, as well as the EC opposed the transaction.
That 2016 tie up was blocked after none of the remedies offered satisfied “serious” concerns about the impact on the mobile sector at the time.