The UK’s Competition and Markets Authority (CMA) warned of potential negative effects for consumers and MVNOs in the provisional results of a probe into a floated merger of Vodafone and 3 UK, as it suggested benefits outlined by the pair around upped 5G investment were being overstated.
Predictably, Vodafone and 3 disagreed with several aspects of view currently being taken by the regulator and plan to work with it on potential remedies to get the deal approved.
In the provisional results of its in-depth investigation, the CMA detailed fears the combination of the operators would lead to price increases for “tens of millions of mobile customers” or result in smaller data allocations being offered in packages.
Within the wholesale segment, it argued cutting the number of providers would make it harder for MVNOs to secure competitive terms with a knock-on impact to their customers.
In the 15 months since the operators unveiled their plans to unite, they have frequently made statements positioning the deal as positive for competition, citing a resulting increased ability to compete with larger rivals and invest in advanced network infrastructure.
However, the CMA said it believed assertions the deal could “improve the quality of mobile networks and bring forward the deployment of next generation 5G networks and services” was being “overstated”, adding “the merged firm would not necessarily have the incentive to follow through on its proposed investment programme after the merger”.
Along with publishing its provisional position on the deal, the CMA outlined various remedy options it is set to investigate. These include “binding investment commitments overseen by the sector regulator, and measures to protect both retail customers and customers in the wholesale market”.
Although listed in potential options, the viability and benefit of forcing the creation of a new fourth player using divested assets was questioned by the authority.
The CMA is consulting on the findings of the investigation and potential measures. The deadline for comments on the report is 4 October, with the due date for submissions related to remedies 27 September. It plans to make a final decision by 7 December.
Response
In a joint statement, Vodafone and 3 UK reiterated their belief the deal would “fix the country’s dysfunctional mobile market characteristics, unleashing more competition and investment”, noting they disagree with “a number of elements” raised by the CMA
The pair took issue with comments related to consumer price rises and a perceived negative impact for MVNOs.
“We are reviewing the Notice of Possible Remedies and look forward to working constructively with the CMA on the different options proposed,” the companies stated, adding they are “confident we can address their concerns”.
Vodafone and 3 added they had “made clear we are committed to delivering our £11 billion investment plan and best-in-class network, which locks in the transaction’s benefits and addresses the CMA’s provisional concerns”.
“We are willing for this commitment to be monitored independently and enforced by Ofcom.”
“By all measures, this merger is pro-growth, pro-customer, pro-investment and pro-competition. It can, and should, be approved by the CMA”.
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