Vodafone and Three’s £15bn merger to be investigated

VODAFONE’S £15bn mobile merger with Three will face an investigation over fears it could drive up prices.

The Competition and Markets Authority (CMA) has referred the deal to a detailed phase two inquiry. The regulator said it has concerns that the tie-up could lead to higher costs for consumers and affect investment in networks.

It gave Vodafone and Three five days to offer concessions but both declined. The watchdog has until Sept 18 to carry out its in-depth review.

The mobile firms said: “This was an expected next step in the process and is in line with the timeframe for completion that we set out from the outset.

“Vodafone and Three remain confident that the transaction will drive stronger competition in the sector and give customers and businesses a stepchange in network quality, speed and coverage from day one.

“A combined network would also boost competition in the wholesale market, by offering greater choice to mobile virtual network operators, the fastest growing segment of the UK’S mobile industry.” Vodafone and Three unveiled plans to merge last year to create the UK’S largest mobile network, with 27m customers. It would cut the number of network operators from four to three. Consolidation has faced opposition from regulators amid concerns it could push up bills. O2’s planned £10bn merger with Three in 2016 was blocked on competition grounds.

Vodafone and Three have argued that the market has changed since then and that the deal is needed to give them the scale to compete with larger rivals EE, owned by BT, and Virgin Media O2.

They have pledged to invest £11bn in their combined 5G network once the deal has completed. The investigation is to examine risks that the merger will reduce competition between the two mobile companies to win customers.

The watchdog is concerned the deal could make it difficult for “virtual” mobile operators such as Sky Mobile and Lebara, which piggyback off larger players’ networks, to negotiate good deals for customers.

Analysts expect Vodafone and Three to be asked to make concessions on mobile spectrum and to offer guarantees about existing network sharing agreements.