Potential Price Hike for Millions: CMA Flags Concerns Over Vodafone-Three Merger

The Competition and Markets Authority has cautioned that a potential merger between Vodafone and Three could lead to higher costs for countless customers. Although the merger might enhance network performance, the authority has expressed skepticism regarding the companies' promises to expedite the deployment of 5G technology, suggesting that these claims may be exaggerated. Additionally, the watchdog warned that the merged entity might lack the motivation to fulfill these commitments after the merger.

Business correspondent @taaffems

Friday, September 13, 2024 08:53

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The competition authority has raised concerns that a proposed merger between Vodafone and Three might lead to higher costs for countless mobile phone subscribers.

The agreement is set to establish the largest mobile network in the UK and has the potential to enhance the quality of service, according to the Competition and Markets Authority (CMA).

The planned merger, unveiled previously and valued at £15 billion, aims to consolidate 27 million customers into one unified service.

However, the CMA noted that assertions about delivering a more rapid 5G network are exaggerated, and the newly merged network might not be motivated to proceed with its promised investments and enhancements.

The regulator mentioned that consumers might end up paying extra for services they do not appreciate.

The CMA expressed specific concerns regarding the impact on individuals who are least financially equipped to handle increased expenses.

There are concerns that following the merger, some individuals might receive diminished services, such as smaller data allotments in their phone plans.

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What's the next

The CMA has tentatively determined that the merger could significantly reduce competition in the UK.

The CMA will now evaluate potential solutions the companies might propose to alleviate these concerns. Should these concerns remain unresolved, the CMA may prevent the deal from proceeding.

Potential solutions for addressing these competitive concerns could involve establishing enforceable investment pledges monitored by the communications watchdog Ofcom, along with introducing safeguards for consumers.

A definitive verdict is expected by early December.

In April, the regulator initiated a thorough probe amid concerns that the merger might significantly reduce competition.

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What is the stance of Vodafone and Three?

The companies expressed disagreement with the issues identified by the CMA, but acknowledged that solutions could be found.

The companies jointly asserted that prices would decrease following the merger.

The statement highlighted that the price increase projections made by the CMA do not align with the financial and operational strategies agreed upon by the merging entities for the new company.

"Following the merger, prices are expected to remain stable or even decrease due to significantly increased competitive forces."

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Vodafone and Three expressed their anticipation to collaborate positively with the CMA.

The companies stated, "We are dedicated to implementing our £11 billion investment strategy and top-tier network, which secures the advantages of the deal and responds to the initial worries of the CMA."

"We are open to having this commitment independently overseen and regulated by Ofcom."

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