UK gives Vodafone and Three five working days for solutions to avoid in-depth merger probe
The U.K.'s Competition and Markets Authority on Friday said Vodafone's proposed merger with rival CK Hutchison will face an in-depth probe, unless the two mobile operators provide "meaningful solutions" to the regulator's concerns.
Vodafone and CK Hutchison's British brand Three have five working days to supply their answers.
The CMA opened a probe into the proposed tie-up back in January. In its latest update on Friday, the CMA said it was concerned the deal would lead to a substantial lessening of competition, result in higher prices for consumers and create an unfavorable environment for mobile virtual network operators.
Mobile virtual network operators, or MVNOs, are a spate of new network operators that have cropped up over the years that use underlying infrastructure from existing telcos, rather than being created from scratch.
Announced last year, Vodafone and CK Hutchison's transaction would merge the two brands' U.K. businesses, giving Vodafone a 51% controling stake and leaving CK Hutchison with the minority interest. Vodafone UK CEO Ahmed Essam was set to helm the new enterprise, with Three UK Chief Financial Officer Darren Purkis slated for the CFO position.
The CMA on Friday said that the deal proposed by Vodafone and CK Hutchison could lead to higher prices and reduced quality for U.K. mobile customers. Vodafone and Three are two of the four biggest network providers in Britain and provide important alternatives for consumers, the CMA said.
Three is generally the cheapest of the U.K.'s big four mobile networks, the CMA noted, and combining it with Vodafone could "reduce rivalry between mobile operators to win new customers."
The CMA also flagged it was worried the deal could make it more difficult for MVNOs such