Three and Vodafone will join forces in the UK.
A multi-billion dollar investment is needed from both companies.
The UK's competition authority has finally approved the merger between Three and Vodafone, an agreement proposed by both companies in June 2023. Although it was initially thought that this move would not be possible, the agency has given the green light after a thorough investigation into the implications of the merger.
The agreement can move forward as long as the two companies formally commit to making a significant investment to develop a combined 5G network in the UK. According to an official statement, this commitment will include short-term protections for consumers, requiring the new entity to set limits on certain mobile tariffs and to offer predetermined contractual conditions to virtual mobile network operators for a period of three years.
Both the CMA and the UK's communications regulator, Ofcom, will oversee compliance with these commitments, and the company resulting from the merger will have to produce an annual report on the implementation of the agreed measures. Stuart McIntosh, chair of the independent research group, indicated that the merger could enhance competition in the UK mobile sector, although he emphasized that this should only proceed if Vodafone and Three agree to implement the proposed measures.
It is worth mentioning that Three attempted to merge with O2 in 2015, but the European Commission blocked the deal a year later, arguing that the concessions offered would not compensate for the potential limitation of competition and price increases. The CMA agreed at the time, but in 2021 allowed the merger of O2 with Virgin Media, determining that the combination would not have a "substantial" impact on competition due to the nature of their joint offerings.