While the network could be improved if the providers formed one company, the competition watchdog said their claims of rolling out speedy 5G connectivity are “overstated”. The businesses may not have the incentive to follow through post-merger, it added.
Vodafone and three signs
Tens of millions of mobile phone users could end up paying more if the merger between Vodafone and Three goes ahead, the competition watchdog has warned.
The deal would create the UK’s biggest mobile network and could also improve network quality, the Competition and Markets Authority (CMA) said.
The proposed £15bn merger, announced last year, would bring 27 million customers together under a single provider.
But claims of providing a faster 5G network are “overstated”, the CMA added, and the new combined network would not “necessarily have the incentive” to follow through on its investment and improvement plan.
Customers may have to pay more for services they don’t value, the regulator also said.
The CMA added it is particularly concerned about the possible effect on those least able to afford higher bills.
It is also worried some people could end up with a reduced service, perhaps with smaller data packages in phone contracts, post-merger.
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What next?
The CMA has provisionally concluded the merger would result in a “substantial lessening of competition” in the UK.
It will now consider how the companies could address those concerns. If they aren’t met the CMA could block the entire deal.
Possible ways of alleviating those competition issues include making legally binding investment commitments overseen by communications regulator Ofcom and implementing measures to protect customers.
A final decision will be made in early December.
The regulator had announced an in-depth investigation in April over fears the merger could “result in a substantial lessening of competition”.
What do Vodafone and Three say?
Both companies disagreed with the concerns raised by the CMA but said they could be addressed.
Prices would actually fall after the merger, a joint statement from the companies insisted.
It said: “The CMA’s price rise assumptions are contrary to the business and investment plans the parties have signed up to for the merged company.
“Prices will either stay broadly the same or actually drop post-merger as a result of the vastly enhanced competitive pressures.”
Vodafone and Three look forward to working constructively with the CMA, they said.
The firms added: “We have made clear we are committed to delivering our £11bn 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.”
