The consumer rights organization, Which?, has warned that there is a substantial risk that the merger between Vodafone and Three in the UK could lead to negative outcomes for consumers in the short term. It said the longer term outcomes could be good for consumers if certain conditions are met, though.
Which? said that in the short term we could see less choice in terms of mobile network offerings, lower quality connectivity, and to rub the salt in - higher prices. However, if these companies can boost investment and more intense competition appears then consumers could benefit.
Which? did warn, however, that there was a high degree of uncertainty about these long term benefits and that there should be an “evidential bar” that should be passed if the Competition and Markets Authority (CMA) is to approve the deal on the basis of these benefits to make it more likely they come to fruition.
For a bit of background for those not familiar with what’s going on, back in June, Three and Vodafone announced that they wanted to merge. This would take the number of mobile carriers in the UK (not including MVNOs) from four to three with the remaining players being BT/EE and Virgin Media O2.
Vodafone has been arguing for a while now that a merger is needed in the UK to ensure the sustainability of the market. It essentially argued that prices are staying too low and this means money can’t be reinvested in the required infrastructure.
The UK’s CMA has to evaluate the merger and decide whether it can go ahead based on competition grounds. A full investigation is still to be launched by the CMA but last month it issued an invitation to comment. Which? has submitted its views to the regulator too.
Which? warned that competition between market participants was needed to give consumers choice, quality, and a good price. It said the four Mobile Network Operators (MNOs) had delivered reasonable outcomes for consumers but a change to this setup could make things worse.
One very important detail that Which? highlighted was that Vodafone and Three customers move directly between the two companies suggesting that they are close competitors. This could lead to a weakening of competition and harm customers.
Now that Which? has published this information, the CMA will take it into consideration when deciding whether to allow the deal. The approval process could be quite lengthy but it’s hard to say how long it will run on for at this stage, it just depends how long an investigation takes and if there will be several phases.
Source: Which?