Investigation into Vodafone/Three Merger
The CMA is launching a formal probe into the proposed merger between Vodafone and Three UK. The proposed deal, which was announced last year, combines the two companies’ telecommunications operations under a single network provider.
The announcement on 26 January marks the start of the “Phase 1” investigation, which will involve assessing whether the proposed merger will create a “substantial lessening of competition”.
The initial market analysis phase can take up to 40 days (completed by 22 March), following which the CMA can decide to proceed to a more in depth “Phase 2” investigation which can last an additional 6 months. It seems likely that this matter will proceed to a Phase 2, which means we can expect a final decision from the CMA in the Autumn.
The CMA is now inviting views by 9 February 2024 on how the merger could affect competition.
The merger would not be the first time a telecommunications market was consolidated from four to three players, with similar consolidation being cleared in European markets since 2010. The first three four-to-three mergers – in Austria (Orange and H3G), Ireland (O2 and H3G), and Germany (Telefonica and E-Plus) – were approved on the basis of remedy packages, since then authorities have taken a stricter approach.
Before Brexit, the Commission blocked the UK merger of H3G/Telefonica on the basis that the proposed remedies were inadequate.
The merger will also come under the National Security and Investment Act (“NSIA”), as Three is owned by a Hong Kong based conglomerate and is subject to a national security law introduced by China.
Vodafone has also recently attracted scrutiny under the NSIA this year, after the Secretary of State in the Cabinet Office has made a Final Order under the in respect of the rights and interests conferred to UAE based company Emirates Telecommunications Group Company PJSC. The companies have been ordered to take notification and mitigation steps moving forward.
Please contact Tim Cowen if you have any questions regarding the above.
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