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The two companies claim the merger would boost the roll-out of 5G, but the CMA wants to see if the deal will lessen competition.
The UK’s Competition and Markets Authority (CMA) has launched a formal investigation into the proposed merger between Vodafone and Three in the UK.
The two mobile operators entered binding agreements last year to combine their UK operations, which would lead to the creation of the biggest mobile operator in the country. Vodafone would own 51pc of the new business, while Three would own the remaining 49pc.
The two companies aimed to close the deal before the end of 2024, but last October the CMA called for comments on the potential impacts of the proposed merger.
After receiving these comments and information from the two companies, the CMA said it is conducting a phase one review to identify whether the deal could lead to a “substantial lessening of competition” in the country’s mobile telecommunication services sector.
The CMA said it has up to 40 working days to assess the deal under this phase one probe, which could turn into a more in-depth phase two investigation.
“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,” said CMA CEO Sarah Cardell. “The CMA will assess how this tie-up between rival networks could impact competition before deciding next steps.”
The CMA has also submitted a second invitation for third parties to comment on the potential impacts of the proposed merger. This invitation for comment will close on 9 February.
If the deal goes ahead, the combined business will have more than 27m subscribers, pushing it past BT’s EE and Virgin Media’s O2. The new company plans to invest £11bn over 10 years to accelerate the roll-out of 5G across the UK, one of the main goals of the merger according to Vodafone and Three.
Vodafone previously claimed that a merged company would be better equipped to handle the costs of a 5G roll-out.
UK telecoms regulator Ofcom was previously outspoken against major mergers in this sector, blocking Three UK’s attempted £10.5bn takeover of 02 in 2016.
But in February 2022, the regulator made a statement that appeared to soften its stance on mergers, which promoted the possibility that competitors could combine their businesses in future.
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