UK Antitrust Authority Raises Concerns Over Vodafone-Three Merger

According to the Wall Street Journal, Vodafone Group’s plan to merge its U.K. operations with rival Three is encountering significant regulatory hurdles. The U.K.’s Competition and Markets Authority (CMA) has expressed concerns that the merger could potentially lead to higher prices for millions of mobile customers and may not guarantee the promised increase in network investments.

The CMA’s preliminary investigation into the merger, which was announced last June, suggests that the consolidation of Vodafone and Three UK could diminish competition. The CMA highlighted that the merger would reduce the number of major telecom network operators in the U.K. from four to three. This reduction might limit competitive options for smaller telecom firms like Lycamobile, Sky Mobile, and Lebara, affecting their ability to negotiate favorable wholesale contracts. These shifts could subsequently impact retail pricing for consumers.

Vodafone and Three UK have disputed the CMA’s findings, arguing that the merger will not harm competition or lead to price increases. The companies maintain that their plan to create a more robust 5G network, with a commitment to invest £11 billion ($14.44 billion) over the next decade, aligns with the U.K. government’s objectives for advanced network infrastructure.

Related: Regulators Probe Swisscom’s $8.8 Billion Vodafone Italia Deal

The CMA’s concerns extend beyond retail pricing to the wholesale market, where the decreased number of network operators could stifle competition. The regulator has expressed skepticism about whether the merged entity will follow through on its investment promises, despite the potential for improved network quality and accelerated 5G deployment.

The investigation led by Stuart McIntosh, chair of the independent group overseeing the review, will continue as the CMA explores potential solutions to address these competitive concerns. The CMA is expected to make a final decision by December 7.

In parallel with this scrutiny, Vodafone is also facing regulatory challenges in Italy, where the sale of its Italian operations to Swisscom for €8 billion ($8.86 billion) is under review by Italian antitrust authorities. This deal, part of Vodafone Chief Executive Margherita Della Valle’s broader strategy to streamline the company’s portfolio and reduce debt, is being closely watched as part of the company’s wider restructuring efforts.

Source: The Wall Street Journal,