Three and Vodafone, one of the UK’s leading mobile operators, have finally received approval in the long-awaited merger process. This proposed merger in June 2023 was approved by the UK Competition and Markets Authority (CMA) following a detailed review process. The decision was taken after an independent investigation group evaluated the effects of the merger on the industry.
According to the CMA’s statement, for the merger to take place, both companies must commit to creating a common 5G network across the UK by investing billions of pounds. In addition, as part of short-term customer protections, the merged company was required to impose price caps for some mobile tariffs and offer certain contractual terms to mobile virtual network operators (MVNOs). These customer protections will be valid for three years.
The merger process will proceed under the strict scrutiny of the CMA and the UK’s communications services regulator Ofcom. In addition, the merged company will have to submit a report for the audit of practices every year.
Stuart McIntosh, chairman of the independent investigation group, said in a statement: “We believe the merger has the potential to increase competition in the UK mobile industry and we are therefore allowing the merger to go ahead, provided Vodafone and Three implement the measures we recommend.” he said.
Three has previously tried to merge with O2
This merger is not Three’s first major merger attempt in the UK mobile market. The company tried to merge with O2 in 2015, but the European Commission (Britain was still a member of the European Union at the time) rejected the offer in 2016 on the grounds that this merger could limit competition and increase prices. Margrethe Vestager, the European Competition Commissioner at the time, declared that the concessions offered by Three were insufficient to offset the negative effects of the merger.
However, in 2021, the CMA approved the merger of O2 and Virgin Media. The CMA had stated that this merger would not cause “significant” harm to competition in the sector because the combined services of the two companies would have a different impact by nature.
The merger of Three and Vodafone represents a significant transformation in the UK mobile industry. Experts think that major investments in 5G infrastructure will contribute to the country’s digitalization processes. However, the long-term effects of this merger on users will be shaped under the strict control of the CMA and Ofcom.