CMA starts its investigation into Vodafone and Three merger

The Competition and Markets Authority (CMA) has started its Phase 1 investigation into Vodafone UK’s joint venture agreement with Three UK to combine the companies’ telecommunications operations under one single network provider.

The CMA must assess the potential impact of a merger on competition. It cannot consider other potential effects, such as national security concerns, which are a matter for the UK government. The government may choose to intervene under the National Security and Investment Act if it finds concerns.

The Unite trade union has stated it believes the planned merger is a threat to the UK’s national security due to Chinese ownership links to Three.

“We now have 40 working days to complete this formal Phase 1 investigation”

Having now received the required pre-notification evidence and information from both Vodafone UK and Three UK, as well as early views from stakeholders, the CMA is starting its formal investigation.

Sarah Cardell, Chief Executive of the CMA, said:

“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. The CMA will assess how this tie-up between rival networks could impact competition before deciding the next steps. We now have 40 working days to complete this formal Phase 1 investigation before publishing our findings and any next steps.”

Ahmed Essam, CEO of Vodafone UK, said:

“We have formally submitted our Merger Notice to the CMA, having worked with them closely through the pre-notification process. We look forward to continuing the constructive conversations now that the formal process has begun. We strongly believe that the proposed merger of Vodafone and Three will significantly enhance competition by creating a combined business with more resources to invest in infrastructure to better compete with the two larger converged players.

“Our commitment to invest £11 billion will build capacity to meet the exponential growth in demand for data and accelerate the rollout of Advanced 5G across the UK, delivering benefits to consumers and businesses throughout the nation

Robert Finnegan, CEO of Three UK, said:

“By combining networks, Three UK and Vodafone UK will unlock £11 billion of investment that will help the UK close the 5G gap with leading European countries and realize its ambitions to be a front-runner in digital connectivity. Thanks to this transaction, 95% of the population and every school and hospital will be covered by standalone 5G by the end of the decade.

“Joining forces will also yield more immediate benefits. From Day One, our customers will enjoy faster, more reliable coverage over more of the country – and without paying a penny extra. We are confident that this transaction will deliver significant benefits to our customers, the country, and competition, and we look forward to working closely with the CMA as they review our notification.”

Both networks say the merger will benefit consumers. The merger in the UK of Vodafone and Three is predicated on resolving this network investment challenge. It will create a new, properly funded third infrastructure provider and help level the playing field with the larger players, while offering better network quality to consumers, business customers, and MVNOs. As such, it will also increase competitive pressure on BT/EE and VMO2 to invest in their mobile networks, driving significant improvements for customers.

They say seven million customers will see improved network speeds and benefit from reduced congestion and less buffering. By 2032, more than eight per cent of the population will benefit from ultrafast average mobile speeds that are around double what either Vodafone or Three could achieve on a standalone basis.