REG - Competition and Mkts - Merger Update: Vodafone / Three

CK Hutchison HoldingsAnnouncement

05/12/2024 08:15

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RNS Number : 9490O  Competition and Markets Authority  05 December 2024

FOR IMMEDIATE RELEASE - 07h00 THURSDAY 5 DECEMBER 2024

CMA clears Vodafone / Three merger, subject to legally binding commitments

Proposed commitments would ensure the merger boosts competition in UK telecoms
with rollout of 5G connectivity

·    Ofcom and CMA would oversee commitments from Vodafone and Three to
implement, in full, the merged company's network plan

·    Certain mobile tariffs to be capped for three years whilst virtual
mobile providers will have access to pre-set wholesale prices and contract
terms

The Competition and Markets Authority (CMA) has decided Vodafone's 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:

"It's crucial this merger doesn't harm competition, which is why we've 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 UK's 5G capability whilst
preserving effective competition in the sector."

More information can be found on the  Vodafone / CK Hutchison JV case page
(https://www.gov.uk/cma-cases/vodafone-slash-ck-hutchison-jv-merger-inquiry?)
 and on the detailed guidance page
(https://www.gov.uk/guidance/how-we-are-investigating-the-vodafonethree-potential-merger)
.

-ENDS-

NOTES TO EDITORS

1.   The publication of the final report by the group marks the end of the
CMA's 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 Virgin Media O2.

4.   'Virtual' network operators - such as Sky Mobile, Tesco Mobile, Lebara,
Lyca Mobile and iD Mobile - do not own their own networks and rely on access
to a mobile network operator's network to supply mobile services to their
customers.

 

 

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