Britain's competition watchdog has provisionally found that a proposed merger between two of the country’s four mobile-network operators would lead to “a substantial lessening of competition”.

The Competition and Markets Authority (CMA) has released the findings of its in-depth investigation into the planned merger of Vodafone UK and Three UK, which have 27 million customers between them.

The CMA has concluded that the merger would lead to price increases for tens of millions of mobile customers, or see customers get a reduced service, such as smaller data packages in their contracts.

Networks impact ‘overstated’

It also expressed concern about the impact on ‘wholesale’ telecoms customers, as Mobile Virtual Network Operators (MVNOs) such as Sky Mobile rely on the existing network operators to provide their own mobile services.

While the CMA said that the merger could improve the quality of mobile networks and bring forward the deployment of next-generation 5G networks and services, it described the companies’ claims on this issue as “overstated”.

“The merged firm would not necessarily have the incentive to follow through on its proposed investment programme after the merger,” it stated.

Solutions

The watchdog will now consult on its provisional findings, as well as potential solutions to its competition concerns.

It has proposed measures that include legally binding investment commitments overseen by the sector regulator, and actions to protect both retail customers and customers in the wholesale market.

The CMA warned, however, that it would retain the option to prohibit the merger if it decided that these options would not address its competition concerns effectively.