The planned £16bn merger of Three and Vodafone could be allowed to proceed after the UK’s competition regulator provisionally found that the combined company could address competition concerns through a series of binding commitments.
In September the Competition and Markets Authority raised concerns that the tie-up could see “tens of millions” of customers face higher prices or less generous talk plan allowances.
The two firms unveiled plans to merge last June, saying the tie-up would mean customers “enjoy a better network experience with greater coverage and reliability at no extra cost.”
However, a preliminary review by the Competition and Markets Authority (CMA) found otherwise on the issue on price and raised concerns that customers could “get a reduced service such as smaller data packages in their contracts” as a result of the tie-up.
It also warned that reducing the number of mobile network operators from 4 to 3 could negatively impact the ability of companies such as Sky Mobile and Lebara, who buy services from the big four and resell to end users, to secure competitive terms.
However, an update published by the CMA today says that a multi-billion-pound commitment to upgrade the merged company’s network across the UK combined with short-term customer protections could solve these concerns and allow the deal to go ahead.
Remedies proposed by the CMA would require Vodafone and Three to:
- deliver their joint network plan which sets out the network upgrade and improvements they will make through significant levels of investment over the next 8 years across the UK. This obligation would be overseen by telecoms regulator Ofcom and the CMA
- commit to retain certain existing mobile tariffs and data plans for at least 3 years, protecting millions of current and future Vodafone / Three customers (including customers on their sub-brands) from short-term price rises in the early years of the network plan
- commit to pre-agreed prices and contract terms to ensure that Mobile Virtual Network Operators can obtain competitive wholesale deals
A final decision will be taken by the CMA after its consulted stakeholders and is due by December 7th.
Stuart McIntosh, chair of the CMA inquiry group examining the deal, said: “We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are addressed.
“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.”