Britain’s antitrust watchdog probes Vodafone-Hutchison merger

UK's antitrust watchdog. Photo Courtesy: Pixabay

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London/IBNS-CMEDIA: The antitrust watchdog in Britain has started an investigation into the $19 billion merger between Vodafone’s UK operation and CK Hutchison’s Three UK, examining whether the deal could negatively impact competition, media reports said.

The merger, disclosed last year, aims to decrease the count of mobile networks in Britain from four to three.

The Competition and Markets Authority (CMA) is tasked with completing its initial investigation within 40 working days, Reuters reported.

If necessary, this may lead to a more thorough phase two probe, anticipated to last 24 weeks.

“This deal would bring together two of the major players in the UK telecommunications market, which is critical to millions of everyday customers, businesses and the wider economy,” said CMA Chief Executive Sarah Cardell, according to Reuters.

“The CMA will assess how this tie-up between rival networks could impact competition before deciding next steps.”

The companies involved have committed to investing £11 billion ($14 billion) to establish “one of Europe’s most advanced standalone 5G networks.”

This investment is seen as an effort to garner support from politicians, unions, and competition authorities.

Ahmed Essam, the Chief Executive of Vodafone UK, who is set to lead the merged entity, emphasised that consumers would stand to benefit from this initiative.

“We look forward to continuing the constructive conversations (with the CMA) now that the formal process has begun,” he said, according to Reuters.

In the past, regulators have intervened to prevent certain transactions that would reduce the number of mobile networks from four to three.

Notably, the European Commission halted the 2016 British merger between Three UK and Telefonica’s O2, citing concerns that it could lead to increased prices.

Following Brexit, the responsibility for ruling on the Vodafone-Three deal now falls under the jurisdiction of the Competition and Markets Authority (CMA).

It’s worth mentioning that the CMA has a history of making decisions that impact major acquisitions. For instance, last year, the CMA initially blocked Microsoft’s $69 billion acquisition of Activision Blizzard.

However, the decision was later revised, and the deal was approved after the case was reopened.

As the CMA assesses the Vodafone-Three deal, it has the authority to either block the merger or accept it, potentially with or without certain conditions or remedies. It’s noted that the CMA has expressed a preference for structural remedies, as mentioned by Cardell in November.