The Competition and Markets Authority (CMA) has announced that it will need an additional 8 weeks to reach a conclusion on their Phase 2 investigation of the proposed mega-merger (here) between mobile operators Three UK and Vodafone. As a result, the deadline has been extended from 18th September 2024 to 7th December 2024.
The merger, which would see Vodafone retain a 51% slice of the business and CK Hutchison (Three UK) hold 49%, has previously been promoted by the parties as something that would be “great for customers, great for the country and great for competition,” while also resulting in a major £11bn investment to upgrade the UK’s 5G mobile (broadband) infrastructure and network coverage.
Despite this, the first phase of the CMA’s investigation raised some concerns earlier this year, not least over the potential reduction in market competition and the potential for consumers to pay higher prices (here). Since then, the competition watchdog has been busy conducting a deeper Phase 2 investigation.
However, the general complexity of all this and some delays with data requests, as well as the recent network sharing deal between O2 (Virgin Media) and Vodafone, has meant that it will now take longer for the CMA to reach a final conclusion.
The CMA published a notice of extension to the original reference period on 10 May 2024, made pursuant to section 39(4) of the Act, as a result of the failure by CK Hutchison to comply with the requirements of a notice under section 109 of the Act (the section 109 notice) issued on 17 April 2024, requiring it to provide documents and information specified in the section 109 notice.
The notice of extension was cancelled on 3 June 2024 following compliance by CK Hutchison with the section 109 notice and the original reference period was extended by 24 days (the revised reference period) and was due to expire on 12 October 2024.
The Inquiry Group now considers that it will not be possible to complete the investigation and to publish its final report within the revised reference period.
In coming to that conclusion, the Inquiry Group has had regard to the following combination of factors, appreciating also the need to be as comprehensive, thorough, and fair as possible within the tight statutory timeframe:
(a) The very wide scope of this inquiry and the technical and regulatory complexity of the sector, which has required the CMA to acquire a detailed technical understanding of the operations of the mobile network operators (MNOs), mobile ‘virtual’ network operators, and the network sharing agreements between the MNOs;
(b) The amount of technical material (including a Joint Business Plan and Joint Network Plan for the Merged Entity underpinned by detailed economic modelling) provided by the Parties in support of their submissions regarding their ability and incentive to realise efficiencies – in particular, the Parties’ Merger simulations and sensitivity analysis (these were provided at such a time that the Inquiry Group was not able to take this evidence into account for the purposes of working papers shared with the Parties, but will need to be considered in the Provisional Findings);
(c) The public announcement on 3 July 2024 (after the Main Party Hearings) of the new Beacon 4.1 agreement between Vodafone Limited and VMED O2 UK Limited,3 which will require the Inquiry Group to assess the implications of the agreement, including gathering and analysing further evidence from third parties; and
(d) The need to complete the CMA’s econometric estimation of consumer demand for mobile services, which is based on granular and voluminous third-party data.
The new date is a hard deadline and the CMA notes that its report may yet be published before 7th December 2024.