Vodafone plan for merger with Three in £13bn British deal faces full competition probe 

Competition and Markets Authority said last month it was concerned the deal creating the country’s largest mobile operator could hurt consumer choice.

Vodafone's planned merger with rival Three in the UK will now get an in-depth investigation from the country’s competition watchdog after it did not offer any remedies putting the £13bn (€15bn) deal in jeopardy.

The Competition and Markets Authority, or CMA, said last month it was concerned the deal creating the country’s largest mobile operator could hurt consumer choice, giving the firms a short deadline to offer up any proposals. 

The probe, which will run until mid-September could put the tie-up at risk should the firms continue to decline to offer any concessions to the regulator.

“There definitely is a considerable risk that it doesn’t get approved,” Karen Egan, head of telecoms at Enders Analysis, said. 

“There is a lot of logic for the deal and I think political and regulatory support among those familiar with the industry, but the CMA is a law onto itself and its way of looking at these things can be quite narrow and technical.” 

The watchdog said the deal could lead to higher prices and reduced quality for customers as well as affecting investment in UK mobile networks. It is also worried the deal may impact smaller virtual mobile networks including Sky Mobile, Lebara, and Lyca Mobile.

Both companies said in a statement they “remain confident that the transaction will drive stronger competition in the mobile sector and give customers and businesses a step-change in network quality, speed, and coverage from day one". 

Still, regulators have rejected previous attempts to consolidate the market. A previous attempt by Three to buy O2 was blocked by the European watchdog before Brexit, which cited one of its main reasons as the reduction of UK mobile network operators from four to three. 

The deal with the Hong Kong billionaire Li family would see the two smallest of the UK’s four mobile operators combine in the fiercely competitive mobile market.

The firms “likely preferred to move the deal swiftly to this in-depth review, and will now turn their focus on devising a set of remedies that can satisfy the regulator but also preserve the value creation opportunity from the merger,” Erhan Gurses, a Bloomberg Intelligence telecoms analyst, said.

In Ireland, Vodafone has in the past said it had no merger plans. In January, Three Ireland said it planned to cut up to 150 jobs, or over 10% of its total staff, as the company's earnings continue to be hit by rising costs. 

Three is the largest mobile telecoms provider in the Republic and  employs more than 1,300 staff. 

• Bloomberg and Irish Examiner staff