The U.K.’s Competition and Markets Authority (CMA) has approved the highly anticipated $19 billion merger between Vodafone and Three, two of the country’s largest mobile network operators (MNOs). The decision comes with specific conditions designed to address competition and consumer concerns.
Vodafone and Three, which together form half of the U.K.’s infrastructure-owning MNO alongside O2 and EE, announced their merger plans in June 2023. The proposal faced significant scrutiny, prompting the CMA to launch an in-depth investigation in January 2024 after an initial phase 1 probe.
Following provisional findings in September that raised concerns about higher consumer prices, reduced services, and weakened investment, the CMA has now given its conditional approval. Vodafone and Three are required to commit to major investments in a nationwide 5G rollout. Additionally, the new entity must cap certain mobile tariffs and maintain fixed contractual terms for mobile virtual network operators (MVNOs) for the next three years.
Margherita Della Valle, Vodafone Group CEO, described the decision as transformative.
“Consumers and businesses will enjoy wider coverage, faster speeds, and better-quality connections across the U.K., as we build the biggest and best network in our home market,” she said. “Today’s approval releases the handbrake on the U.K.’s telecoms industry, and the increased investment will power the U.K. to the forefront of European telecommunications.”
Unlike similar mergers across Europe, the CMA’s approval relies on behavioural remedies rather than structural changes such as divestments. This pragmatic approach reflects a focus on ensuring long-term consumer benefits, according to Alex Haffner, competition partner at Fladgate.
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“The CMA has permitted a ‘4-3’ merger in the mobile sector based on purely behavioural remedies,” Haffner stated. “This decision demonstrates a degree of pragmatism, sensing that consumers will ultimately benefit from competition between three well-resourced mobile operators in the U.K.”
The agreed-upon measures will be overseen by the CMA and Ofcom, the U.K.’s telecommunications regulator. Stuart McIntosh, chair of the CMA’s inquiry committee, emphasized the importance of safeguarding competition.
“This merger mustn’t harm competition, which is why we’ve spent time considering how it could impact the telecoms market,” McIntosh said. “Having carefully considered the evidence and extensive feedback, we believe the merger is likely to boost competition in the U.K. mobile sector and should be allowed to proceed — but only if Vodafone and Three implement our proposed measures.”
