How we are investigating the Vodafone/Three potential merger
Why the CMA is investigating the potential Vodafone/Three merger and what it might mean for consumers.
The Competition and Markets Authority (CMA) has started a detailed Phase 2 investigation looking into Vodafone UK’s joint venture agreement with Three UK.
The merger would combine the companies’ UK telecommunications operations under one single network provider.
Both firms have made significant investments in their networks in recent years, including the rollout of 5G. Three is generally the cheapest of the 4 mobile network operators.
What we have found so far
The CMA launched a formal investigation into the proposed merger in January 2024.
At the end of this initial investigation (called a ‘Phase 1 investigation’) the CMA found that a detailed Phase 2 merger inquiry was required.
This means the CMA will investigate the impact of this potential merger on competition in the telecommunications sector in more detail.
The CMA will assess how this potential merger between rival networks could impact competition before deciding next steps.
How this merger could impact consumers
Competition can help to keep prices low, as well as provide an important incentive for network operators to improve their services, including by investing in network quality.
In its initial investigation, the CMA was concerned the merger, which combines 2 of the 4 mobile network operators in the UK, gave rise to a realistic prospect of a substantial lessening of competition. This could mean that mobile customers face higher prices and reduced quality, including through lower investment in UK mobile networks.
How merger investigations work
Merger investigations go through the following 6 key 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.
Our Phase 1 investigation
The CMA first carries out an initial review of the merger to determine whether there is a realistic prospect of a substantial lessening of competition. This is known as our Phase 1 investigation.
If the CMA isn’t concerned about the merger, it clears it. But if there are competition concerns that are not solved following its initial review, the CMA carries out a more in-depth investigation, known as Phase 2.
In this investigation, the CMA completed its Phase 1 investigation in March 2024.
Phase 2 investigation begins
At Phase 2, the CMA will build on the work at 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.
The CMA will meet with the businesses proposing to merge and their representatives ‘on site’ to learn more about their business.
Every Phase 2 inquiry is run by an appointed inquiry group. This is an independent panel made up of 3 to 5 people with a range of business, finance, economic and legal experience. They are responsible for making the final decision 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 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, including members of the public, is invited to share their views with the CMA.
Analysis of evidence
After publishing the Issues Statement, the CMA continues gathering and reviewing 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 send the merging businesses its thoughts on possible solutions, in a document referred to as a ‘remedies notice’.
Final report
This includes the final decision on the merger, including whether the inquiry group 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. For example, this can include selling part of the business or prohibiting the merger altogether
Follow the progress of this investigation
For detailed information visit the Vodafone / Three merger inquiry case page.