Following the initial probe, the British competition watchdog gave time for the parties to offer remedies to address its concerns but Vodafone UK and Three UK did not offer such undertakings, which led to the initiation of the phase 2 investigation
Vodafone UK and Three UK’s merger faces UK CMA’s in-depth phase 2 probe. (Credit: Mtaylor848/Wikimedia Commons)
The UK Competition and Markets Authority (CMA) has launched an in-depth phase 2 probe into Vodafone Group and CK Hutchison’s previously announced merger of their UK telecommunication businesses Vodafone UK and Three UK, respectively.
Both parties signed the binding agreement in June 2023. Under the terms of the proposed merger, Vodafone will own a 51% stake in the combined business, while CK Hutchison will hold the remaining 49% stake.
In January 2024, the British competition watchdog opened a phase 1 investigation to understand if the deal may give rise to a significant reduction in competition for consumers and businesses.
Following the initial probe, the CMA, at the end of last month, said that the merger could hinder competition within the supply of retail mobile services and wholesale mobile services in the UK.
The CMA gave time for the parties to offer remedies to address its concerns. However, Vodafone UK and Three UK said that they will not offer such undertakings, which led to the initiation of the phase 2 investigation.
The British competition regulator stated: “Therefore, pursuant to sections 33(1) and in accordance with section 34ZA(2) of the Act, the CMA has decided to refer the Merger to its chair for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013 to conduct a phase 2 investigation.”
According to the CMA’s phase 1 findings, the deal would stifle competition between mobile operators to win new customers.
The CMA has also raised concerns regarding the difficulty that the merger would create for smaller mobile virtual network operators including Lebara, Sky Mobile, and Lyca Mobile to bring forth good deals for their own customers.
This will reduce the number of mobile network operators who are able to host the virtual networks, said the regulator.
A decision on the deal following the phase 2 probe is expected to be made by the CMA by 18 September 2024.