The UK’s Competition and Markets Authority (CMA) outlined plans to launch an in-depth phase two investigation into a proposed tie-up of Vodafone UK with 3 UK unless the companies provide meaningful solutions to concerns related to the deal.

Vodafone and 3 have five working days from today (22 March) to respond to the CMA’s concerns, following an initial assessment which found the deal could lead to higher prices for customers and lower investment in mobile networks.

“These warrant an in-depth investigation unless Vodafone and 3 can come forward with solutions,” the CMS stated.

The CMA launched its phase one investigation in January, conducting a 40-day review to identify if the deal may lead to a substantial lessening of competition.

It explained the initial probe found Vodafone and 3 each provide important alternatives for mobile customers and had made significant investment in their networks over the years, including on the rollout of 5G.

The CMA noted a concern the combination would reduce rivalry among operators to win new customers, decrease motivation to keep prices low and lessen the incentive to improve networks.

It also raised concerns the merger may make it difficult for smaller MVNOs including Sky Mobile, Lebara and Lyca Mobile to negotiate good deals for their own customers.

The CMA further acknowledged that when first announcing the deal, Vodafone and 3 claimed they would provide significant benefits to customers and speed deployment of new technologies. However, it added the claims were based on several assumptions post-merger and it now requires more detailed assessment.

Kester Mann, director of consumer and connectivity at CCS Insight, said an in-depth phase two probe was widely expected and, assuming the parties make no new offers in the coming days, the “real investigation will begin”.

“Vodafone, 3 is poised on a regulatory knife-edge, but if both parties are eventually willing to make further concessions, such as divesting assets like mobile spectrum, they should just about get it over the line,” he added.