Competition watchdog warns merger could lead to higher consumer prices; final decision due in December.
The UK Competition and Markets Authority (CMA) is worried that the Vodafone and Three combination could lead to increased rates for customers, thus approval of the deal is currently pending. Although a final verdict is expected by December 7, preliminary results from the CMA indicate that the merger may significantly reduce competition in the retail and wholesale mobile industries.
Margherita Della Valle, the CEO of Vodafone, makes the case that the merger is necessary to advance the UK's digital infrastructure and suggests investing £11 billion to improve connection. The CMA argues, however, that this investment falls short of adequately reducing the possibility of higher expenses or fewer services for millions of mobile subscribers.
The CMA is also concerned about mobile virtual network operators (MVNOs), since a reduction in network operators from four to three may result in more difficult circumstances for them. The CMA considers these advantages are overstated, even though the combination would speed up 5G rollout and enhance network quality.
Both businesses have responded by stating that they disagree with the CMA's conclusions and that they will continue to cooperate with the authority to resolve its issues. As long as Vodafone and Three present acceptable alternatives by the December deadline, analysts believe that the CMA's openness to investigate behavioral adjustments could offer a route to approval.
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