UK opens antitrust probe into Vodafone merger with CK Hutchison's Three mobile network

KEY POINTS

• Britain's competition watchdog on Friday said it is opening an investigation into the proposed merger between Vodafone and the Three UK mobile network owned by CK Hutchison.
• The initial probe will look at whether the deal will lead to a "substantial lessening of competition," according to the U.K. Competition and Markets Authority (CMA). If this is found, the CMA can continue with a more in-depth investigation.
• The transaction, which was agreed last year, would give Vodafone ownership of 51% of the combined business, leaving CK Hutchison with the minority stake.

A pedestrian walks past a Vodafone store in central London on May 16, 2023. British mobile giant Vodafone is to axe 11,000 jobs over three years in the latest cull to hit the tech sector, as new boss Margherita Della Valle slammed recent performance.

Adrian Dennis | AFP | Getty Images

Britain's competition watchdog on Friday said it is opening an investigation into the proposed merger between Vodafone and the Three UK mobile network owned by CK Hutchison.

The initial probe will look at whether the deal will lead to a "substantial lessening of competition," according to the U.K. Competition and Markets Authority (CMA). If this is found, the CMA can continue with a more in-depth investigation.

"This deal would bring together two of the major players in the UK telecommunications market, which is critical to millions of everyday customers, businesses and the wider economy," CMA CEO Sarah Cardell said in a statement.

"The CMA will assess how this tie-up between rival networks could impact competition before deciding next steps."

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The CMA has 40 working days to assess the deal before deciding what to do next.

The transaction, which was agreed last year, would give Vodafone ownership of 51% of the combined business, leaving CK Hutchison with the minority stake.

Current Vodafone UK CEO Ahmed Essam will lead the new enterprise, while the present Three UK Chief Financial Officer (CFO) Darren Purkis will assume the CFO position at the merged business.

Vodafone has been going through a transition since its former CEO Nick Read stepped down at the end of 2022. The company appointed Margherita Della Valle as permanent CEO in April to transform the business.

The combination of Vodafone's U.K. business and Three UK will reduce the number of mobile operators in the country to just three, after major consolidation in the telecommunications sector in the past few years.

Vodafone and Three UK defended the deal in a statement on Friday.

"We strongly believe that the proposed merger of Vodafone and Three will significantly enhance competition by creating a combined business with more resources to invest in infrastructure to better compete with the two larger converged players," Essam said, adding that Vodafone looks "forward to continuing the constructive conversations" with the CMA now that the formal process has begun.

The increasingly-powerful CMA has been taking a closer look at big mergers and acquisitions recently. Last year, the CMA held up Microsoft's $69 billion acquisition of gaming firm Activision Blizzard, before eventually clearing the deal.