CMA says Vodafone-Three merger could proceed with remedies

5th Nov 2024 09:17

(Sharecast News) - The Competition and Markets Authority (CMA) provisionally indicated that the proposed merger between Vodafone and Three could move forward on Tuesday, if the companies implemented significant network investments and customer safeguards.

It followed the publication of a Remedies Working Paper by the CMA's independent inquiry group, outlining measures to address competition concerns previously identified in September.

In its initial findings, the CMA raised concerns that the merger could result in higher prices for consumers and negatively impact mobile virtual network operators, including Sky Mobile, Lyca, Lebara and iD Mobile.

However, the Remedies Working Paper suggested that a commitment from Vodafone and Three to invest in network upgrades, including the rollout of 5G infrastructure, could mitigate the competitive risks.

Under the proposed remedies, Vodafone and Three would legally commit to an eight-year network investment plan, intended to enhance mobile network quality across the UK.

The plan would be overseen by both the CMA and Ofcom, ensuring that the merged entity delivered on its promises.

Additionally, Vodafone and Three would be required to maintain certain mobile tariffs and data plans for at least three years, protecting customers from price hikes during the initial network upgrade phase.

Further provisions would mandate pre-agreed pricing and contract terms for MVNOs, enabling the operators to continue accessing competitive wholesale rates.

The CMA was seeking feedback on the proposals, with a final decision on the merger expected by 7 December.

"We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are addressed," said Stuart McIntosh, chair of the inquiry group leading the investigation.

"Our provisional view is that binding commitments combined with short-term protections for consumers and wholesale providers would address our concerns while preserving the benefits of this merger.

"A legally binding network commitment would boost competition in the longer term and the additional measures would protect consumers and wholesale customers while the network upgrades are being rolled out."

At 0858 GMT, shares in Vodafone Group were up 1.75% at 73.4p.

Reporting by Josh White for Sharecast.com.