Competition watchdog launches formal probe of Vodafone and Three tie-up

The Competition and Markets Authority (CMA) has launched a formal investigation into the merger of Vodafone and Three.

Back last June, Vodafone and CK Hutchinson, owner of Three, announced their long-awaited UK £15bn merger. The deal would combine the companies’ telecommunications operations under one single network provider.

The CMA today has started its Phase 1 investigation into the joint venture agreement as the CMA assess how this tie-up between rival networks could impact competition before deciding next steps.

Some commentators have suggested this merger presents a potential risk to the UK’s national security as CK Hutchison Holdings is based in Chinese-controlled Hong Kong.

Speaking on this to City A.M., Ahmed Essam, chief executive officer of Vodafone UK explained: “This is a very simplistic analysis. We already thoroughly protect the data of our customers big and small with strict security protocols. If we didn’t, our customers – some of which are big Government departments involved in national security – wouldn’t trust us to be their technology partner.”

“But they do, and we don’t win these contracts without being subjected to strict security vetting procedures, as is only right.”

Essam also stated that “this merger would be great for customers, great for competition, and great for the country.”

As part of its normal merger review process in a regulated sector, the CMA has been engaging with Ofcom, the sectoral regulator which oversees mobile communications.

So just for the record, a merger of Vodafone UK and Three UK would not pose a threat to the UK’s national security,” he added.

The CMA has 40 working days to complete this formal Phase 1 investigation, before publishing its findings and any next steps. The statutory deadline for this investigation is Friday 22 March 2024.

All eyes will be on those findings as if the CMA finds the merger could lead to a substantial lessening of competition, then it can refer it for a more in-depth Phase 2 merger investigation.

Speaking on the informal investigation, Sarah Cardell, chief executive of the CMA, said: “This deal would bring together two of the major players in the UK telecommunications market, which is critical to millions of everyday customers, businesses and the wider economy. The CMA will assess how this tie-up between rival networks could impact competition before deciding next steps.”

“We now have 40 working days to complete this formal Phase 1 investigation, before publishing our findings and any next steps,” she added.