REG - Competition and Mkts - Merger Update: Vodafone / Three

VodafoneAnnouncement

05/11/2024 08:15

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RNS Number : 9670K  Competition and Markets Authority  05 November 2024

FOR IMMEDIATE RELEASE - 07h00 TUESDAY 5 NOVEMBER 2024

CMA provisionally finds Vodafone / Three could address competition concerns
through network investment and customer protections

·      CMA inquiry group investigating Vodafone / Three merger publishes
Remedies Working Paper.

·      Merger could proceed if appropriate remedies are implemented.

·      CMA to seek feedback before making a final decision by 7
December.

The Competition and Markets Authority (CMA) has provisionally found that a
multi-billion-pound commitment to upgrade the merged company's network across
the UK, including the roll-out of 5G, combined with short-term customer
protections could solve competition concerns identified in September and allow
the merger to go ahead.

The CMA investigation - led by an independent inquiry group - provisionally
found in September that the merger could lead to higher prices for customers
and harm the position of mobile virtual network operators, such as Sky Mobile,
Lyca, Lebara and iD Mobile. The CMA also consulted on potential solutions to
address its concerns - known as remedies.

The CMA has today set out a Remedies Working Paper to seek views on the
effectiveness of a proposed remedy package.

It provisionally finds that a legally binding commitment to undertake the
network integration and investment programme proposed by Vodafone and Three
would significantly improve the quality of the merged company's mobile
network, boosting competition between mobile network operators in the long
term and benefiting millions of people who rely on mobile services.

The CMA also found that short term protections would be needed to ensure that
retail consumers and mobile virtual network operators can continue to secure
good deals during the initial years of network integration and investment
roll-out.

The remedies proposed today would require Vodafone and Three to:

·      deliver their joint network plan - which sets out the network
upgrade and improvements they will make through significant levels of
investment over the next 8 years across the UK. This would be a legal
obligation overseen by both Ofcom - the telecoms regulator - and the CMA

·      commit to retain certain existing mobile tariffs and data plans
for at least 3 years, protecting millions of current and future Vodafone /
Three customers (including customers on their sub-brands) from short-term
price rises in the early years of the network plan

·      commit to pre-agreed prices and contract terms to ensure that
Mobile Virtual Network Operators can obtain competitive wholesale deals

Stuart McIntosh, chair of the inquiry group leading the investigation,
said:

"We believe this deal has the potential to be pro-competitive for the UK
mobile sector if our concerns are addressed.

"Our provisional view is that binding commitments combined with short-term
protections for consumers and wholesale providers would address our concerns
while preserving the benefits of this merger.

"A legally binding network commitment would boost competition in the longer
term and the additional measures would protect consumers and wholesale
customers while the network upgrades are being rolled out."

Today's announcement is provisional, with a final decision due before the 7
December statutory deadline. The inquiry group is inviting feedback on today's
announcement by 5pm on 12 November.

More information can be found on the Vodafone / CK Hutchison JV case page
(https://www.gov.uk/cma-cases/vodafone-slash-ck-hutchison-jv-merger-inquiry?)
 and on the detailed guidance page
(https://www.gov.uk/guidance/how-we-are-investigating-the-vodafonethree-potential-merger)
.

-ENDS-

NOTES TO EDITORS

1.   The CMA's guidance explains that the Remedies Working Paper may be
published on the CMA website if the CMA deems wider consultation to be
necessary. In this case, the CMA considers the publication of the Remedies
Working Paper is appropriate for third parties to understand its provisional
decision and provide any further views before the final decision.

2.   The inquiry group's decision set out in the Remedies Working Paper
published today on the appropriate remedy to address the competition concerns
identified in the provisional findings is provisional. Following consultation
on the Remedies Working Paper, the Group will take its final decision on both
the competition issues and any remedies by 7 December 2024.

3.   Vodafone UK (which is owned by Vodafone Group Plc) and Three UK (which
is owned by CK Hutchison Holdings Limited) are 2 major providers of mobile
telecommunication services in the UK. Last year both businesses announced a
joint venture agreement which would bring their 27 million customers under a
new, single network operator.

4.   The 4 mobile network operators in the UK are Vodafone UK, Three UK,
BTEE and Virgin Media O2.

5.   'Virtual' network operators - such as Sky Mobile, Tesco Mobile, Lebara,
Lyca Mobile and iD Mobile - do not own their own networks and rely on access
to a mobile network operator's network to supply mobile services to their
customers.

6.   Part way through the Phase 2 investigation, Vodafone and Three entered
into an agreement with VMO2 (Beacon 4.1) which involves, among other things,
the divestment of spectrum to VMO2 (conditional on CMA approval for the
merger). The CMA has considered the impact of this as part of its
assessment.

 

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