UK regulator refers Vodafone's merger with Three for in-depth competition probe

KEY POINTS

• The U.K. competition regulator on Thursday referred the proposed merger between Vodafone and CK Hutchison's Three mobile network to an in-depth investigation.
• The Competition and Markets Authority said, with the information that it currently has, the deal may "be expected to result in a substantial lessening of competition" in the U.K.
• Vodafone and CK Hutchison's transaction would merge the two brands' U.K. businesses, giving Vodafone a 51% controlling stake and leaving CK Hutchison with the minority interest. 

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

The U.K. competition regulator on Thursday referred the proposed merger between Vodafone and CK Hutchison's Three mobile network to an in-depth investigation.

The Competition and Markets Authority said, with the information that it currently has, the deal may "be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom."

In late March, the CMA gave Vodafone and CK Hutchison five working days to come up with "meaningful solutions" to the regulator's concerns or face an in-depth investigation.

The CMA has given itself a deadline of Sept. 18 to complete the in-depth probe, also known as a phase 2 investigation.

The CMA has previously said the deal could lead to customers facing higher prices and reduced quality, a lessening of competition in the U.K. mobile market. Regulators have argued the transaction could also result in so-called mobile virtual network operators, which rely on Vodafone and Three's infrastructure, not being able to negotiate good deals for their own users.

The regulator's process hinges on a decision on whether the deal will lead to a "substantial lessening of competition" (SLC) in the market. The CMA can clear the transaction in the absence of SLC or request remedies from the companies to address its concerns.

Announced last year, Vodafone and CK Hutchison's transaction would merge the two brands' U.K. businesses, giving Vodafone a 51% controlling stake and leaving CK Hutchison with the minority interest. 

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

Vodafone and Three said in a joint statement that the investigation was "an expected next step" and is "in line with the timeframe for completion" that the two companies laid out from the onset.

The two mobile networks said they "remain confident that the transaction will drive stronger competition in the mobile sector and give customers and businesses a step-change in network quality, speed, and coverage from day one."

Vodafone and Three reiterated that "there will be no change to each operator's pricing strategy as a result of the merger."

The CMA opened an antitrust probe into the merger in January.