GovWire

The Competition and Markets Authority (CMA) has decided Vodafones merger with Three should be allowed to proceed if both companies sign binding commitments to invest billions to roll out a combined 5G network across the UK. The network commitment would be supported by shorter term customer protections which would require the merged company to cap certain mobile tariffs and offer preset contractual terms to mobile virtual network operators, for a period of 3 years.

In September, the independent inquiry group leading the in-depth Phase 2 investigation of the merger provisionally found it could lead to higher prices for customers and less advantageous terms for virtual network providers (which depend on networks like those provided by Vodafone and Three to supply their own retail customers).

Since publishing those findings, the group has explored how its concerns might be resolved and in November published a remedies working paper which included a range of potential remedy options. The group has since analysed responses to the working paper and closely engaged with respondents. The group has also sought further input from Ofcom, the communications regulator.

In its final decision, published today, the group has confirmed it is now satisfied that the proposed network commitment, supported by shorter term protections for both retail and wholesale customers, resolve its competition concerns.

The merger will therefore be allowed to proceed subject to the following legally binding commitments which require:

• Delivery of the joint network plan, which sets out the network upgrade, integration and improvements Vodafone and Three will make to their combined network across the UK over the next 8 years. The group has concluded that by significantly improving the quality of the combined network, the full implementation of this plan would boost competition between the mobile network operators in the long term, benefiting millions of people who rely on mobile services.

• Capping selected mobile tariffs and data plans for 3 years, directly protecting large numbers of Vodafone / Three customers from short-term price rises in the early years of the network plan.
• Offering pre-set prices and contract terms for wholesale services (again for 3 years) to ensure that virtual network providers can obtain competitive terms and conditions as the network plan is rolled out.

The network commitment would be overseen by both Ofcom and the CMA, with the merged company also required to publish an annual report setting out its progress on the implementation of the network plan. The CMA would have responsibility for monitoring and enforcing the protections relating to consumer tariffs and wholesale terms.

Stuart McIntosh, chair of the independent inquiry group leading the investigation, said:

Its crucial this merger doesnt harm competition, which is why weve spent time considering how it could impact the telecoms market.

Having carefully considered the evidence, as well as the extensive feedback we have received, we believe the merger is likely to boost competition in the UK mobile sector and should be allowed to proceed but only if Vodafone and Three agree to implement our proposed measures.

Both Ofcom and the CMA would oversee the implementation of these legally binding commitments, which would help enhance the UKs 5G capability whilst preserving effective competition in the sector.

More information can be found on the Vodafone / CK Hutchison JV case pageand on the detailed guidance page.

Notes to editors

1. The publication of the final report by the group marks the end of the CMAs Phase 2 merger investigation. If Vodafone and Three agree to the commitments, the CMA will now work to implement them, otherwise the CMA will block the deal.

2. Vodafone UK (which is owned by Vodafone Group Plc) and Three UK (which is owned by CK Hutchison Holdings Limited) are 2 major providers of mobile telecommunication services in the UK. Last year both businesses announced a joint venture agreement which would bring tens of millions of customers representing 27 million subscriptions - under a new, single network operator.

3. The 4 mobile network operators in the UK are Vodafone UK, Three UK, BTEE and Virg

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