Last year, Vodafone UK and Three UK announced a joint venture deal that would bring their customers under a new, single network provider. As two major providers of telecommunication services in the UK, this deal affects around 27 million customers. Many of these customers are businesses who are concerned with maintaining cost and reliability of services.
The Competition and Markets Authority (CMA) has completed its initial Phase 1 investigation into the deal and has raised concerns.
The deal would mean that the four mobile network operators in the UK would effectively reduce to three, and this could lead to higher prices and reduced quality for customers.
They have noted that Three UK is generally the cheapest of the four major operators, providing an important alternative in the market. Healthy competition can help to keep prices low and provide an important incentive for businesses to improve their services. Therefore, combining the businesses could reduce rivalry to the detriment of customers.
The UK also has a number of smaller ‘virtual’ network operators that use the networks of the four network operators. The CMA is concerned that combining Vodafone and Three will make it more difficult for these smaller operators to negotiate good deals, and this will further reduce the options available to customers.
Vodafone and Three have made a number of claims about how their deal will be good for competition and investment, but the CMA feels there is insufficient evidence for these claims.
Vodafone and Three have been given five working days to respond to the claims. The deal will otherwise be referred to a more in-depth Phase 2 investigation.
See: https://www.gov.uk/cma-cases/vodafone-slash-ck-hutchison-jv-merger-inquiry?
