The U.K.’s competition regulator launched the initial phase of an antitrust investigation in January after the entity was notified by the two carriers about the proposed merger
U.K. operator BT believes that the proposed merger between local telcos Vodafone and Three will have a negative impact in the local mobile market.
The U.K.’s Competition and Markets Authority (CMA) has recently published ten responses to a previous process in which the regulator was seeking comments from interested parties about the impact of the merger as well as possible remedies for the merger.
BT claimed that the proposed merger will “create a merged entity with a disproportionate share of capacity and spectrum, unprecedented in U.K. and Western European mobile markets, which will substantially lessen competition and deter investment.” According to the report issued by BT, the merged entity would have a 61% share of the U.K. mobile network capacity.
The carrier also noted that the proposed merger would result in “higher prices, poorer network quality and reduced incentives to invest – all to the detriment of U.K. consumers.”
Meanwhile, in another response, Swedish vendor Ericsson expressed its support of the potential merger.
“Consolidation is broadly seen as a pivotal measure towards helping operators to attain the necessary scale for expanding their future network infrastructure,” said Ericsson’s response.
“Consequently, it should facilitate the delivery of the high-quality service, high bandwidth, and extensive coverage needed to fully harness the economic and social benefits of nationwide 5G standalone networks,” Ericsson said.
Last month, the U.K government released a “publication of notice of Final Order” that provisionally approves the merger, subject to certain conditions.
The CMA launched the initial phase of an antitrust investigation in January after the entity was notified by the two carriers about the proposed merger. This initial review is designed to identify whether the deal may lead to a “substantial lessening of competition” and therefore requires an in-depth, phase 2 investigation. Phase 2 investigations, which started in April and are expected to conclude in September, allow an independent panel of experts to probe in more depth initial concerns identified at phase 1, the CMA explained.
Vodafone and Three UK had previously said that the decision by the CMA to carry out a new in-depth review of their proposed merger was in line with the expected timeframe for completion of the transaction. In a joint statement, the two telcos said they remain confident that the transaction will deliver significant benefits in terms of competition.
Last year, Vodafone UK, which is owned by Vodafone Group and Three UK, owned by CK Hutchison Holdings, had announced a new joint venture agreement that would bring their operations under a single network provider. Under the terms of the proposed merger, Vodafone will own 51% of the new entity while Hutchison Group will own 49%.
“The merger will create a third mobile network operator with scale, able and incentivized to invest fully in a best-in-class network. A combined network would also boost competition in the wholesale market, by offering greater choice to MVNOs, the fastest growing segment of the U.K.’s mobile industry,” they added.
The CMA recently highlighted that it has concerns that the deal could lead to mobile customers facing higher prices and reduced quality.
