The Competition and Markets Authority (CMA) will refer Vodafone UK and Three UK’s planned merger to a Phase 2 review, citing concerns that the deal may lead to mobile customers facing higher prices and reduced quality.
Phase 2 investigations will see an independent panel of experts explore in more depth the initial concerns identified at Phase 1.
The CMA’s Phase 1 investigation found that Vodafone UK and Three UK provide important alternatives for mobile customers and shared concerns that the deal may make it difficult for smaller mobile ‘virtual’ network operators.
Julie Bon (pictured), Phase 1 decisionmaker for this case at the CMA, said: “Whilst Vodafone and Three have made several claims about how their deal is good for competition and investment, the CMA has not seen sufficient evidence to date to back these claims.
“Our initial assessment of this deal has identified concerns which could lead to higher prices for customers and lower investment in UK mobile networks. These warrant an in-depth investigation unless Vodafone and Three can come forward with solutions.”
Vodafone UK and Three UK’s heads have responded to the further investigation and remain confident of the transaction.
Vodafone UK CEO, Ahmed Essam, said: "We will work with the independent panel on the Phase 2 process. This transaction will create an operator with the scale required to take on BTEE and VMO2, give MVNOs greater choice in the wholesale market and is in the wider interests of customers, competition and the country."
Three UK CEO, Robert Finnegan, added: "The current market structure is holding the UK back, which is not good for customers or competition. By creating a third player with the necessary scale to invest, the combination of our two companies will deliver one of Europe's most advanced networks and move the UK into the digital fast lane."