Proposed Vodafone and Three UK Merger Set For In-Depth Investigation

The UK Competition and Markets Authority (CMA) has referred the proposed merger between Vodafone (LON: VOD) and Three UK to an in-depth investigation, it was revealed Thursday.

The CMA believes, with the current information at its disposal, the deal may “be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.”

The CMA started its Phase 1 investigation, looking into Vodafone UK's joint venture agreement with Three UK, owned by CK Hutchison Holdings Limited. Then in March, the CMA said the merger “could lead to higher prices for customers and affect investment in UK mobile networks.”

The CMA then gave Vodafone and CK Hutchison a deadline of five working days to provide “meaningful solutions” to the regulator's concerns or face an in-depth investigation.

The in-depth investigation now has a September 18 deadline to be completed, also known as a phase 2 investigation.

“The CMA has decided, on the information currently available to it, that it is or may be the case that this merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom,” the CMA stated. “This merger will be referred for a phase 2 investigation unless the parties offer acceptable undertakings to address these competition concerns.”

The CMA has previously said the deal could leave consumers and businesses worse off due to a lessening of competition in the UK mobile market.

The Vodafone and Three UK merger was announced last year, with the deal giving Vodafone a 51% controlling stake and CK Hutchison a minority interest.

If it were to go through, the deal would result in the number of mobile operators in the UK being reduced to three after significant consolidation in the sector in the past few years.