The competition watchdog said the deal should be allowed to proceed if both companies sign binding commitments to invest billions to roll out a combined 5G network across the UK.
The network commitment would be supported by shorter-term customer protections that would require the merged company to cap certain mobile tariffs and offer pre-set contractual terms to mobile virtual network operators, for a period of three years.
In September, the independent inquiry group leading the in-depth Phase 2 investigation of the merger provisionally found it could lead to higher prices for customers.
There were also concerns the tie-up could mean less advantageous terms for virtual network providers that piggyback off Vodafone and Three.
However, since publishing those findings, the group has explored how its concerns might be resolved. In November, it published a remedies working paper that included a range of potential remedy options. The group has since analysed responses to the working paper and closely engaged with respondents. The group has also sought further input from Ofcom.
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In its final decision, published today, the inquiry group has confirmed it is now satisfied that the proposed network commitment – supported by shorter-term protections for both retail and wholesale customers – resolve its competition concerns.
The merger will therefore be allowed to proceed subject to several legally binding commitments. These include the delivery of the joint network plan, which sets out the network upgrade, integration and improvements Vodafone and Three will make to their combined network across the UK over the next eight years.
The networks will also be required to cap select mobile tariffs and data plans for three years to protect customers from short-term price rises in the early years of the network plan.
Vodafone and Three will also be obliged to offer pre-set prices and contract terms for wholesale services for three years to ensure that virtual network providers can obtain competitive terms and conditions as the network plan is rolled out.
Stuart McIntosh, chair of the independent inquiry group leading the investigation, said: “It’s crucial this merger doesn’t harm competition, which is why we’ve spent time considering how it could impact the telecoms market. Having carefully considered the evidence, as well as the extensive feedback we have received, we believe the merger is likely to boost competition in the UK mobile sector and should be allowed to proceed – but only if Vodafone and Three agree to implement our proposed measures.
“Both Ofcom and the CMA would oversee the implementation of these legally binding commitments, which would help enhance the UK’s 5G capability whilst preserving effective competition in the sector.”
