The proposed deal between Vodafone and Three could result in “higher prices” for mobile customers and thousands of jobs being put at risk, Britons have been warned.
A merger between the mobile firms could lead to “reduced quality” for consumers amid the cost of living crisis, the Competition and Markets Authority (CMA) found.
The trade union Unite has warned that the move could add an additional £300 a year on consumers’ bills and risk thousands of jobs.
Vodafone and Three announced the £15billion merger last year in a move that would create the UK’s largest mobile phone network.
At the time, both firms argued the merger would allow them to raise investment and compete with rivals like BT and Virgin Media O2.
In January, the CMA launched an initial phase one investigation into the merger and has now voiced its concerns over the consequences of the two of the country’s biggest mobile firms merging.
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The merger would create the largest mobile firm in the country
PAThe regulator warned it is “concerned the deal … could lead to mobile customers facing higher prices and reduced quality”.
According to the CMA, both Vodafone and Three are vital alternatives for mobile customers on the market and a merger would offer less choice to consumers.
The primary concern is that less rivalry between businesses may mean there will be less incentive to offer competitive deals to customers.
Furthermore, the watchdog highlighted that the deal will “make it difficult” for smaller mobile firms to negotiate good deals for their own customer base.
Julie Bon, the CMA’s phase one decision-maker for this case, said: “Whilst Vodafone and Three have made a number of claims about how their deal is good for competition and investment, the CMA has not seen sufficient evidence to date to back these claims.
“Our initial assessment of this deal has identified concerns which could lead to higher prices for customers and lower investment in UK mobile networks.
“These warrant an in-depth investigation unless Vodafone and Three can come forward with solutions.”
Sarah Carpenter, the executive head of Operations at Unite, added: “As well as raising serious competition risks, the proposals would harm the job security of UK workers and would raise prices for consumers when they are still suffering from the cost-of-living crisis.
“As we've consistently argued, any deal that threatens these core values should be subject to the most rigorous examination.”
Following the CMA’s assessment, Vodafone and Three shared that they will review the concerns and will “engage constructively” with the regulator.
Ahmed Essam, Vodafone UK’s chief executive officer, defended the merger between the two companies.
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Consumers could pay an extra £300 more if the deal is given the green light
PAHe said: “By merging our two companies, we will be able to invest £11 billion to help the UK realise its ambitions to be a world leader in next-generation 5G technology and increase competition across the industry.
“This transaction will create an operator with the scale required to take on BT/EE and Virgin Media-O2, give MVNOs (mobile virtual network operators) greater choice in the wholesale market and is in the wider interests of customers, competition and the country.”
Robert Finnegan, Three UK’s chief executive officer said: “The current market structure is holding the UK back, which is not good for customers or competition.
“By creating a third player with the necessary scale to invest, the combination of our two companies will deliver one of Europe’s most advanced networks and move the UK into the digital fast lane, benefiting customers from day one.”
