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LONDON — The Competition and Markets Authority (CMA) in the UK on Friday confirmed that it is launching an in-depth investigation into the proposed $19 billion merger between Vodafone and Three UK, saying the deal could lead to higher prices for the consumers.
Vodafone UK (owned by Vodafone Group Plc) and Three UK (owned by CK Hutchison Holdings Limited) are two major providers of mobile telecommunication services in the UK.
Last year, the companies announced a new joint venture agreement, which would bring their 27 million customers under a new, single network provider.
The CMA in January this year launched a formal probe into the proposed $19 billion merger.
The Phase 1 investigation found that combining these two businesses will reduce rivalry between the mobile operators to win new customers.
“The CMA is concerned that the deal, which combines two of the four mobile network operators in the UK, could lead to mobile customers facing higher prices and reduced quality,” the regulator said in a statement.
The CMA is also concerned that the deal may make it difficult for smaller mobile ‘virtual’ network operators such as Sky Mobile, Lebara and Lyca Mobile to negotiate good deals for their customers.
“Our initial assessment of this deal has identified concerns which could lead to higher prices for customers and lower investment in UK mobile networks,” said Julie Bon, Deputy Chief Economic Advisor, CMA.
“These warrant an in-depth investigation unless Vodafone and Three can come forward with solutions.”
Both Vodafone UK and Three UK have five working days to respond with meaningful solutions to the CMA, otherwise, the deal will be referred to a more in-depth Phase 2 investigation.