How we investigated the Vodafone / Three merger
Why the Competition and Markets Authority (CMA) has cleared the Vodafone / Three merger and what it could mean for customers.
The CMA investigates the impact of certain potential mergers and assesses how they could affect competition in the UK. This is to promote a fair and competitive environment, where businesses and the UK economy thrive, and consumers can be confident they are getting great choices and fair deals.
Competition can help to drive growth, keep prices low, as well as provide an important incentive for businesses to improve their services.
After an in-depth investigation, we have found that the merger should be allowed to go ahead, if Vodafone and Three sign binding commitments to help protect consumers and wholesale customers.
You can read more details on the Vodafone / Three case page.
How we investigated this merger
In April 2024 we adopted a new process for phase 2 investigations.
The Vodafone / Three case followed our previous process for phase 2 investigations, following these 6 stages:
Diagram showing the CMA's merger investigation process. Flow chart which includes: Our Phase 1 investigation, Phase 2 investigation begins, Issues statement published, Analysis of evidence, Provisional findings and Final report.
Phase 1
In our initial investigation (called a ‘phase 1 investigation’) which began in January 2024, we found that the merger, which would combine 2 of the 4 mobile network operators in the UK, could lead to a substantial lessening of competition.
If we are not concerned about a merger, we clear it at this stage. Because we did find possible competition concerns, a more in-depth investigation, known as Phase 2 was needed.
In this investigation, the CMA completed its Phase 1 investigation in March 2024.
Phase 2
At Phase 2, we build on the work in Phase 1 and gather more evidence from the merging businesses and others to investigate potential issues with competition that could arise as a result of the merger.
Every Phase 2 inquiry is run by an appointed inquiry group made up of people with a range of business, finance, economic and legal experience. The inquiry group is responsible for deciding the statutory questions on the case.
For Vodafone / Three, the CMA began a Phase 2 investigation in April 2024. The inquiry group was appointed at the same time.
Issues statement published
The Issues Statement shows the initial focus of the Phase 2 investigation and sets out what are called ‘theories of harm’, which are the potential concerns being investigated.
At this point anyone is invited to share their views with the CMA – including businesses and members of the public.
Analysis of evidence
After publishing the Issues Statement, we continue to gather and review evidence. Hearings are held with the main parties (and sometimes third parties) to ask questions about the evidence received and explore key issues.
If the inquiry group thinks the merger could have a negative impact on competition, it will also start thinking about potential solutions to those concerns (known as ‘remedies’).
Provisional findings
Once the inquiry group has a good understanding of the business of the organisations proposing to merge, and a strong evidence base, it will publish the ‘provisional findings’.
This document outlines the provisional decision on the merger.
If there are concerns, the inquiry group will also publish its initial thoughts on possible solutions, in a document referred to as a ‘remedies notice’.
The inquiry group published their provisional findings and the remedies notice on 13 September 2024. The group found that the merger might lead to price increases or reduced services such as smaller data packages for tens of millions of mobile customers.
The inquiry group found that:
- higher bills or reduced services would significantly impact those customers least able to afford mobile services
- a large number of customers might have to pay more for improvements in network quality that they don’t value
- the deal would affect wholesale customers by reducing available network operators from 4 to 3 – likely meaning they are less able to secure competitive terms and offer the best deals to retail customers
The inquiry group noted that the merger could improve the quality of mobile services and bring forward next generation 5G networks and services.
However, they also considered that:
- the merger firm might not follow through on its proposed investment programme after the merger
- those improvements, if delivered, may not be as significant as claimed
Remedies working paper
On 5 November 2024, the inquiry group announced its provisional view that the merger could go ahead if Vodafone and Three offer legally binding commitments (known as remedies) that address the concerns it outlined in September.
The inquiry group invited comments and suggestions before they made any final decisions.
The final report
The inquiry group’s final report sets out the final decision on the merger, including whether it believes it would harm competition for consumers or businesses in the UK.
If the inquiry group finds no competition concerns, the merger can go ahead as planned.
If the inquiry group finds that the merger may be expected to result in a substantial lessening of competition, it will decide how its concerns should be remedied.
This can include:
- selling part or all of the business
- prohibiting the merger
- requiring the companies to commit to take certain actions
Outcome
On 5 December 2024, the inquiry group found that Vodafone’s merger with Three should be allowed to go ahead if both companies agree to certain legally binding commitments.
Under these commitments, Vodafone and Three would:
- deliver their joint network plan, setting out the network upgrade, integration and improvements they will make to their combined network across the UK over the next 8 years
- cap selected mobile tariffs and data plans for 3 years – directly protecting affected customers from short-term price rises in the early years of the network plan
- offer pre-set prices and contract terms for wholesale services (for 3 years) to ensure that virtual network providers have competitive terms and conditions
The network improvement commitment would be overseen by both Ofcom and the CMA, with the merged company needing to publish an annual report setting out its progress.
The CMA will monitor and enforce the protections relating to consumer tariffs and wholesale terms.
If Vodafone and Three agree to these commitments, the CMA will then work to implement them, otherwise the CMA will block the deal.
Updates to this page
Published 29 April 2024Last updated 5 December 2024 + show all updates
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Update on final report published.
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Update on remedies working paper published.
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Update on phase 2 provisional findings added
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First published.