Vodafone and Three merger approved with binding 5G roll-out commitment

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 three 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, the group confirmed it was satisfied that the proposed network commitment, supported by shorter-term protections for both retail and
wholesale customers, resolved 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 eight 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, benefitting millions of people who rely on mobile services.

• Capping selected mobile tariffs
and data plans for three 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 three 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.”