UK watchdog shows Vodafone-Three merger a path forward despite competition concerns
Vodafone’s US$19.7 billion deal for the network owned by Li Ka-shing’s CK Hutchison Holdings would create the UK’s largest carrier
The UK challenged Vodafone Group and Three’s claims that their proposed £15 billion (US$19.7 billion) merger would leave the country’s mobile networks better off, saying the deal raises serious competition concerns. But the regulator still left the deal a potential path to completion.
The Competition and Markets Authority said on Friday that it had found issues with the combination, with price rises and customers getting reduced service as particular concerns. However, it found the merger could improve the quality of the mobile networks.
The CMA’s decision is essentially a green light for the merger, said Karen Egan from Enders Analysis. The pricing harms are “modest”, and the proposed remedies are easy for the companies to follow.
The CMA will now ask Vodafone to offer solutions for remedies to clear the deal before its final decision on December 7. Shares in Vodafone were little changed in morning trading in London.
Although the CMA said that the deal could improve the quality of mobile networks and speed up the deployment of 5G coverage, the agency said the companies may not have the incentive to follow through with the proposed investments after the merger.
In its findings, the CMA suggested a number of ways to assuage its concerns. It suggested that the companies commit to their investment targets and not raise prices for customers. It also said the firms could propose standardised wholesale pricing to ensure that virtual network operators get a fair price.
