How we investigated this merger

In April 2024 we adopted a new process for phase 2 investigations.

The Vodafone / Three case followed our previous process:process for phase 2 investigations, following these 6 stages:

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

Phase 1: January to March 20241

In our initial investigation (called a ‘phase 1 investigation’) wewhich began in January 2024, we found that the merger, which would combine 2 of the 4 mobile network operators in the UK, could lead to a substantial lessening of competition.

If Wewe decidedare thatnot concerned about a merger, we clear it at this stage. Because we did find possible competition concerns, a more in-depth investigation, known as ‘phasePhase 2’,2 was needed.

In this investigation, the CMA completed its Phase 2:1 Aprilinvestigation 2024in March 2024.

Phase 2

At phasePhase 2,2, we gatheredbuild on the work in Phase 1 and gather more evidence from the merging businesses and others to understandinvestigate howpotential theissues mergerwith competition that could affectarise competition.as a result of the merger. 

TheEvery Phase 2 inquiry wasis run by an appointed inquiry group made up of people with a range of business, finance, economic and legal experience. ThisThe inquiry group wasis responsible for deciding the statutory questions on the case.  

Issues

For statement:Vodafone May/ 2024

ThisThree, statementthe CMA  setbegan out:

• thea Phase initial2 focusinvestigation in ofApril the2024. phaseThe inquiry 2group was investigation
• appointed at the potentialsame concernstime.

  Issues westatement investigatedpublished

  The (whatIssues weStatement callshows ‘theoriesthe ofinitial harm’)

• howfocus ourof phasethe Phase 2 investigation wouldand focussets onout thewhat identifiedare theoriescalled ‘theories of harm

Weharm’, invitedwhich anyoneare –the includingpotential businessesconcerns andbeing membersinvestigated.

At ofthis thepoint publicanyone –is invited to share their views with us,the CMA – including businesses and publishedmembers theirof responses.the public.

Analysis of evidence: May to September 2024evidence

After publishing the issuesIssues statement,Statement, we continuedcontinue to gather and analysereview evidence. WeHearings are held hearings and calls with Vodafonethe andmain Threeparties (and sometimes third parties) to ask questions about the evidence received,received and to explore importantkey issues.

Provisional

If findings:the Septemberinquiry 2024group 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 hadhas a good understanding of Vodafonethe andbusiness Three,of the organisations proposing to merge, and a strong evidence base, it publishedwill itspublish the ‘provisional findings’.

This document outlines the provisional findingsdecision inon Septemberthe 2024.merger.

ItIf foundthere that:are concerns, the inquiry group will also publish its initial 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 risesincreases or reduced services (likesuch as smaller data packages)packages for tens of millions of mobile customers

customers.

The inquiry group found that:

• those higher bills or reduced services would significantly affectimpact those customers least able to afford mobile services
• manya 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 mergedmerger companyfirm might not follow through on its proposed investment programme after the merger
• those improvements, if delivered, may not be as significant as claimed

The inquiry group also published its first thoughts on potential solutions to its concerns (known as ‘remedies’), in the form of a ‘remedies notice’.

Remedies working paper: November 2024paper

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

The inquiry group invited comments and suggestions before makingthey itsmade any final decision.decisions.

FinalThe final report

The andinquiry outcome:group’s Decemberfinal 2024report tosets Juneout 2025the final decision on the merger, including whether it believes it would harm competition for consumers or businesses in the UK.

We’veIf clearedthe Vodafone’sinquiry group finds no competition concerns, the merger withcan Threego subjectahead as planned.

If the inquiry group finds that the merger may be expected to legallyresult bindingin commitmentsa substantial lessening of competition, it will decide how its concerns should be remedied.

WeThis publishedcan ourinclude:

• selling finalpart reportor inall of the business
• prohibiting the merger
• requiring the companies to commit to take certain actions

Outcome

On 5 December 2024.2024, Itthe inquiry group found that theVodafone’s merger with Three should be allowed to go ahead if Vodafoneboth andcompanies Three agree to certain legally binding commitments (undertakings).commitments.

Under these undertakings,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 the 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

The innetwork theimprovement earlycommitment yearswould ofbe theoverseen networkby plan

Vodafoneboth Ofcom and Three gave the CMA, thesewith undertakingsthe onmerged 28company Marchneeding 2025,to sopublish wean clearedannual thereport   mergersetting andout closedits our investigation.progress.

WeThe CMA will workmonitor withand enforce the businessesprotections relating to implementconsumer thetariffs undertakings. Ofcom and thewholesale CMAterms.

If haveVodafone publishedand aThree jointagree statementto thatthese explainscommitments, ourthe rolesCMA inwill overseeingthen thework networkto commitmentimplement remedy.them, Theotherwise mergedthe companyCMA will needblock tothe publish an annual report setting out its progress.deal.