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The UK competition watchdog has found that the proposed £16.5bn merger of Vodafone’s business with CK Hutchison’s Three UK could lead to higher bills for tens of millions of customers, and demanded that the companies make changes to the deal.
The companies must agree remedies for the tie-up to proceed, the Competition and Markets Authority said on Friday, as it announced the initial findings of an in-depth probe into the deal, which was first announced in 2023. The regulator said it would “explore potential solutions” to its concerns before a final decision by December 7.
The merger is expected to create the country’s largest mobile operator, and would cut the number of operators from four to three.
“The investigation . . . has provisionally concluded that the merger would lead to price increases for tens of millions of mobile customers, or see customers get a reduced service, such as smaller data packages in their contracts,” the CMA said in a statement.
“The CMA has particular concerns that higher bills, or reduced services, would negatively affect those customers least able to afford mobile services,” it added.
The CMA opened a “phase 2 investigation” of the deal almost six months ago after deciding in an initial review that the companies had not provided enough evidence that it would benefit competition and investment.
Remedies proposed by the CMA include legally binding investment commitments overseen by the communications regulator, and measures to protect retail and wholesale customers.
The competition watchdog said it had also provisionally concluded the deal would negatively impact wholesale customers — mobile network operators such as Lyca Mobile, Sky Mobile and Lebara — which use other mobile networks to provide their own services.
Still, the regulator acknowledged that the deal “could improve the quality of mobile networks and bring forward the deployment of next generation 5G networks and services”, as claimed by Vodafone and Three UK.
The companies said in a joint statement that they “disagree with the CMA’s provisional findings that their merger raises competition concerns and could lead to price rises for customers”, and that they “look forward to working with the CMA to secure approval”.
When the deal was announced, the companies said the merged business would invest £11bn over 10 years to support the rollout of 5G networks and that there would no change to their pricing.
