- The UK’s Competition and Markets Authority (CMA) has laid out the path for the clearance of the £16.5bn merger of Vodafone UK and Three in a new ‘remedies working paper’
- CMA “provisionally finds” that the merger would boost competition in the long term between mobile network operators as long as their £11bn network investment plan is set in legal stone
- Short-term protection is also needed on retail and wholesale prices, according to the UK competition watchdog
- Analyst reckons the operators can “tentatively order in the champagne”
The UK’s Competition and Markets Authority (CMA) has moved closer to giving a green light to the proposed £16.5bn merger of Vodafone UK and Three, provided they accept certain conditions on network investment and retail prices.
After expressing concerns in September that the merger would increase consumer bills, limit wholesale choice for mobile virtual network operators, and that the duo’s planned £11bn investment in a nationwide combined network (including 5G) might be “overstated”, the CMA has announced a ‘remedies working paper’ for a final round of consultation.
The paper looks to be hugely positive for Vodafone and Three. Crucially, the UK’s watchdog said it “provisionally finds that a legally binding commitment to undertake the network integration and investment programme… would significantly improve the quality of the merged company’s mobile network, boosting competition between mobile network operators in the long term and benefiting millions of people who rely on mobile services.”
The CMA also flagged the importance of “short-term protections” to ensure that retail consumers and mobile virtual network operators (MVNOs) “can continue to secure good deals during the initial years of network integration and investment rollout.”
The network and pricing conditions are unlikely to faze Vodafone and Three, since they offered remedies of this sort to assuage the CMA’s competition fears.
“Vodafone and Three can tentatively order in the champagne as their blockbuster UK joint venture appeared to take another big step forward,” said Kester Mann, director of consumer and connectivity at industry research firm CCS Insight.
Blockbuster is right. “Approval,” added Mann, “would mark one of the most significant developments in the history of UK mobile, heralding the arrival of a new market leader with over 29 million customers.”
Vodafone and Three enthusiastically welcomed the CMA’s recognition of merger upsides in what has been a lengthy process of regulatory scrutiny. “The paper follows 18 months of extensive engagement between the CMA and the ‘parties’ [Vodafone and Three], including the submission of detailed evidence, which highlights the pro-growth, pro-customer and pro-competitive benefits of the merger,” said the two operators in a joint statement.
Vodafone and Three cautioned that they still need to study the CMA’s working paper in detail but they were clearly optimistic that a merger go-ahead was now in sight.
“From what the CMA has communicated so far this morning, we believe it provides a path to final clearance,” they said. “An appropriate balance appears to have been struck by ensuring that the significant benefits of the merged company’s investments can be realised in full and at pace to the benefit of the country and its citizens, while addressing the CMA’s stated concerns.”
Today’s announcement from the CMA is provisional, with a final decision due by 7 December. An independent inquiry group into the merger, working on behalf of the CMA, has set a deadline of 12 November for any industry feedback to the paper.
“The watchdog’s statement won’t be welcomed by all,” said Mann. “BT and Sky Mobile have sternly opposed the deal and are likely to vociferously attempt one final time to have it blocked before the CMA’s final deadline in less than five weeks.”
- Ken Wieland, Contributing Editor, TelecomTV
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