How we investigatedare investigating the Vodafone / Three potential merger

Why are we investigating the Vodafone / Three potential merger?

The CMA investigates the impact of certain potential mergers and assesses how they could affectimpact competition in the UK. This is to promote a fair and competitive environment, where businesses and the UK economy thrive, and consumers can be confident they are getting great choices and fair deals.

Competition can help to drive growth, keep prices low, as well as provide an important incentive for businesses to improve their services.

HowWhat wehappens investigatednext?

It’s important to remember that this mergerworking paper is provisional and the inquiry group is inviting feedback on these proposed remedies by 5pm on 12 November 2024.

InWe’ll Aprilpublish 2024our we adoptedfinal adecision newbefore process forthe phasestatutory 2deadline investigations.on 7 December 2024.

How this merger investigation works

The Vodafone / Three case followedfollows our previous process timeline for phase 2 investigations,investigations. followingIn April 2024 we adopted a new process for phase 2.

This investigation follows these 6 key stages:

• Phase 1
• Phase 2
• Issues statementStatement
• Analysis of evidence
• Provisional findings
• Final report

Our Phase 1

InThe ourCMA initialfirst investigationcarries (calledout aan ‘phaseinitial 1review investigation’)of whichthe beganmerger into Januarydetermine 2024, wewhether foundthere thatis thea merger,realistic whichprospect would combine 2 of thea 4substantial mobilelessening networkof operatorscompetition. inThis theis UK,known couldas leadour toPhase a1 substantial lessening of competition.investigation.

If wethe areCMA notisn’t concerned about athe merger, weit clearclears itit. atBut thisif stage.there Becauseare wecompetition didconcerns findthat possibleare competitionnot concerns,solved following its initial review, the CMA carries out a more in-depth investigation, known as Phase 2 was needed.2.

In this investigation, the CMA completed its Phase 1 investigation in March 2024.

Phase 2

At Phase 2, wethe CMA will build on the work inat Phase 1 and gather more evidence from the merging businesses and others to investigate potential issues with competition that could arise as a result of the merger. merger.

The CMA will meet with the businesses proposing to merge and their representatives ‘on site’ to learn more about their business.

Every Phase 2 inquiry is run by an appointed inquiry groupgroup. This is an independent panel made up of 3 to 5 people with a range of business, finance, economic and legal experience. TheThey inquiryare group is responsible for decidingmaking the statutoryfinal questionsdecision on the case.  

For Vodafone / Three, the the CMA  began a a Phase 2 investigation in in April 2024. The The inquiry group was was appointed at the same time.

Issues statementStatement published

The Issues Statement shows the initial focus of the Phase 2 investigation and sets out what are called ‘theories of harm’, which are the potential concerns being investigated.

At this point anyoneanyone, including members of the public, is invited to share their views with the the CMA – including businesses and members of the public..

Analysis of evidence

After publishing the Issues Statement, wethe continueCMA tocontinues gathergathering and reviewreviewing evidence. Hearings are held with the main parties (and sometimes third parties) to ask questions about the evidence received and explore key issues.

If the inquiry group thinks the merger could have a negative impact on competition, it will also start thinking about potential solutions to those concerns (known as ‘remedies’).

Provisional findings

Once the inquiry group has a good understanding of the business of the organisations proposing to merge, and a strong evidence base, itbase, it will publish the ‘provisional findings’.

This document outlines the provisional decision on the merger.

If there are concerns, the inquiry group will also publishsend itsthe initialmerging businesses its thoughts on possible solutions, in a document referred to as a ‘remedies notice’.

The inquiry group published their provisional findings and the remedies notice on 13 September 2024. The group found that the merger might lead to price increases or reduced services such as smaller data packages for tens of millions of mobile customers.

The inquiry group found that:

• higher bills or reduced services would significantly impact those customers least able to afford mobile services
• a large number of customers might have to pay more for improvements in network quality that they don’t value
• the deal would affect wholesale customers by reducing available network operators from 4 to 3 – likely meaning they are less able to secure competitive terms and offer the best deals to retail customers

The inquiry group noted that the merger could improve the quality of mobile services and bring forward next generation 5G networks and services.

However, they also considered that:

• the merger firm might not follow through on its proposed investment programme after the merger
• those improvements, if delivered, may not be as significant as claimed

RemediesFinal working paper

On 5 November 2024, the inquiry group announced its provisional view that the merger could go ahead if Vodafone and Three offer legally binding commitments (known as remedies) that address the concerns it outlined in September.

The inquiry group invited comments and suggestions before they made any final decisions.

The final report

TheThis inquiryincludes group’s final report sets out the final decision on the merger, including whether itthe inquiry group believes it would harm competition for consumers or businesses in the UK.

If

• if the inquiry group finds no competition concerns, the merger can go ahead as planned.

  Ifplanned

• if the inquiry group finds that the merger may be expected to result in a substantial lessening of competition, it will decide how its concerns should be remedied.

  Thisremedied; for example, this can include:

  • include selling part or all of the business
  • business, prohibiting the merger
  • altogether, or requiring the companies to commit to take certain actions

  Outcome

  OnFollow 5 December 2024, the inquiryprogress group found that Vodafone’s merger with Three should be allowed to go ahead if both companies agree to certain legally binding commitments.

  Under these commitments, Vodafone and Three would: 

  • deliver their joint network plan, setting out the network upgrade, integration and improvements they will make to their combined network across the UK over the next 8 years
  • cap selected mobile tariffs and data plans for 3 years – directly protecting affected customers from short-term price rises in the early years of thethis network plan
  • offer pre-set prices and contract terms for wholesale services (for 3 years) to ensure that virtual network providers have competitive terms and conditions

  investigation

  TheFor networkdetailed improvementinformation commitmentvisit would be overseen by both Ofcom and the CMA, with the merged company needing to publish an annual report   setting out its progress.

  The CMA will monitor and enforce the protections relating to consumer tariffs and wholesale terms.

  If Vodafone and/ Three agreemerger toinquiry thesecase commitments, the CMA will then work to implement them, otherwise the CMA will block the deal.page.