VodafoneThree merger could lead to higher prices

THE proposed merger between mobile networks Vodafone and Three could lead to “higher prices” and “reduced quality” for customers, the competition watchdog has warned.

The Competition and Markets Authority (CMA) said the deal will now face an in-depth investigation unless both companies can soon address their worries.

Vodafone and Three first announced the £15 billion merger last summer. It would create the UK’s largest mobile phone network. The two mobile firms have argued the deal will allow them to increase investment and better compete with major rivals, EE operator BT and Virgin Media-O2.

However, the Competition and Markets Authority (CMA) launched an initial phase 1 investigation into the move in January and said on Friday it has concerns over the impact of two the UK’s four largest mobile firms merging.

It is “concerned the deal ... could lead to mobile customers facing higher prices and reduced quality”. The regulator said it found in its initial probe that the two companies are important alternatives for mobile customers and combining these two businesses will reduce rivalry between mobile operators to win new customers.

Julie Bon, Phase 1 decisionmaker for this case at the CMA, said: “While Vodafone and Three have made a number of claims about how their deal is good for competition and investment, the CMA has not seen sufficient evidence to date to back these claims.

“Our initial assessment of this deal has identified concerns which could lead to higher prices for customers and lower investment in UK mobile networks. These warrant an in-depth investigation unless Vodafone and Three can come forward with solutions.”

The watchdog also raised concerns that the deal “may make it difficult” for smaller mobile operators such Sky Mobile,

Lebara and Lyca Mobile to negotiate good deals for their own customers, by reducing the number of mobile network operators who will host them.

Vodafone and Three have said they will review the CMA’s concerns and will “engage constructively” with the regulator.

Vodafone UK chief executive officer Ahmed Essam said: “By merging our two companies, we will be able to invest £11 billion to help the UK realise its ambitions to be a world leader in nextgeneration 5G technology and increase competition across the industry. This transaction will create an operator with the scale required to take on BT/EE and Virgin Media-O2.”

DEVON airline Flybe has finally been dissolved leaving £700m of debts unpaid. The Exeter-based carrier was at one time a million-passenger operation but it fell into administration in early 2020 and has now finally been wound up.

Documents filed at Companies House reveal the firm, now called FBE Realisations 2021 Ltd, ceased to exist on March 18. A newer company using the name Flybe, based in Birmingham, is still in administration but ceased trading in January last year. Administrators for FBE Realisations 2021 Ltd revealed in filed documents last October that there were more than 935,460 claims from unsecured creditors amounting to a jaw-dropping £684m. Following a hearing in the High Court a notice was sent to all creditors telling them they would not receive any money.

A further court hearing last month approved the dissolution of the company. Secured creditors were paid, however, with £29.2m going to lenders, and £3.1m to BRAL Trustee for a fixed charge on the airline’s training academy. Investigations into all Flybe Ltd/FBE Realisations directors, shadow directors or de-facto directors, for their conduct in the three years before the administration, concluded and no action is being taken against them.

Flybe/FBE Realisations filed for administration on March 5, 2020, and ceased all operations. The airline, which once accounted for more than a third of UK domestic flights, had been struggling for months but claimed the onset of the Covid pandemic was the final straw. The company had been set up in 1979 as Jersey European Airways, was rebranded British European in 2000 and then Flybe in 2002.

The company was taken over by Connect Airways in 2019, but the following year it emerged Flybe was in financial trouble with mounting losses and it sought a £100m Government

bailout. When this didn’t come it collapsed with EY Parthenon appointed as administrators.

Meanwhile, a hedge fund-backed company called Thyme Opco Ltd acquired the business and some assets from the administrators and renamed itself Flybe Ltd in April 2021, commonly referred to as “Flybe 2” or “new Flybe” by some observers. A nominal consideration of £1 was paid, with some surviving employees transferring to the new company.

The new Flybe was based at Birmingham Airport, with crew and aircraft at Belfast City and engineers at Exeter Airport. But it lasted just 10 months.