The Competition and Markets Authority (CMA) has provisionally found that Vodafone and Three could address competition concerns by committing to network investment and customer protection measures.
In September, a CMA investigation – led by an independent inquiry group – provisionally found that the merger could lead to higher prices for customers and harm the position of mobile virtual network operators (MVNOs), such as Sky Mobile, Lyca, Lebara and iD Mobile. The CMA also consulted on potential solutions to address its concerns – known as remedies.
The regulator has today set out a Remedies Working Paper to seek views on the effectiveness of a proposed remedy package. It has provisionally found that a legally binding commitment to a network investment programme could boost competition between mobile network operators in the long term and benefit customers.
The remedies proposed by the CMA today would require Vodafone and Three to:
- Deliver a joint network plan – which sets out the network upgrade and improvements they will make through significant levels of investment over the next eight years across the UK. This would be a legal obligation overseen by both Ofcom and the CMA.
- Commit to retain certain existing mobile tariffs and data plans for at least three years, protecting 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 MVNOs 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.
Kester Mann, analyst and director of consumer and connectivity at CCS Insight, explained what this decision means for the stakeholders involved. He said, “Vodafone and Three can tentatively order in the champagne as their blockbuster UK joint venture appeared to take another big step forward following a positive statement from the competition watchdog this morning.
“After months of scrutiny, the CMA indicated it is ready to accept the proposed remedies offered by Vodafone and Three to finally allow their planned merger to proceed. Approval would mark one of the most significant developments in the history of UK mobile, heralding the arrival of a new market leader with over 29 million customers.
“The watchdog’s statement won’t be welcomed by all. BT and Sky Mobile have sternly opposed the deal and are likely to vociferously attempt one final time to have it blocked before the CMA’s final deadline in less than five weeks.”