UK regulator finds Vodafone and Three merger would lead to price rises, seeks remedies for deal
Britain’s competition watchdog on Friday said it found competition concerns with the proposed merger between Vodafone and the Three UK mobile network owned by CK Hutchison.
The U.K. Competition and Markets Authority (CMA) said the deal would lead to price increases for tens of millions of customers or see some users get reduced services. The regulator also warned of a negative impact for so-called Mobile Virtual Network Operators (MVNOs), which piggyback on existing infrastructure.
“The CMA has provisionally concluded that the merger would lead to a substantial lessening of competition in the UK – in both retail and wholesale mobile markets,” the regulator said in a press release.
Vodafone and CK Hutchison’s transaction, which was announced last year, would merge the two brands’ U.K. businesses, giving Vodafone a 51% controlling stake and leaving CK Hutchison with the minority interest.
But the CMA opened an antitrust probe in to the deal in January and announced an in-depth investigation in April.
The regulator said Friday the merger would result in higher prices or reduced services, and could “negatively affect those customers least able to afford mobile services.”
Vodafone and Three U.K.’s merger would also reduce the number of major telecommunications network players from four to three, the regulator said, adding that this could make it harder for MVNOs to secure competitive deals which may reduce their ability to offer competitive rates to customers.
The CMA did however recognize that the deal “could improve the quality of mobile networks and bring forward the deployment of next generation 5G networks and services,” which the two merging networks have claimed.
However, the CMA said those claims could be “overstated” and that the merged firm would “not necessarily have the incentive to follow through on its proposed investment programme after the merger.”
The CMA has not blocked the deal.
Vodafone response
Vodafone said that the merged entity will invest £11 billion ($14.46 billion) into U.K. telecommunications infrastructure.
“It delivers massive benefits for consumers, in towns, in cities, across the country,” Ahmed Essam, CEO of European markets for Vodafone, told CNBC’s “Squawk Box Europe” on Friday.
Vodafone has argued that the U.K.’s digital infrastructure continues to lag behind other major economies and that its investment would help boost areas like next-generation 5G networks and broader coverage to more parts of the country.
Vodafone said in a separate statement Friday that it disagrees with the findings that the merger would lead to price increases for consumers. The merger would not affect its pricing strategy and that there would be enhanced competition between MVNOs, the firm said.
“I think every consumer in the U.K. today recognizes that there are not only four players … there are more than a hundred players in the market offering a lot of offers. And with this merger, we bring a third scaled quality network that is able to compete and drive better outcomes for customers,” Essam said.
What’s next?
The CMA said it will now consult on the provisional findings and potential solutions to its competition concerns, including remedies. These could include legally binding investment commitments and measures to protect both retail and wholesale customers.
The CMA could block the merger if its concerns are not addressed, the regulator said.
Essam said Vodafone is ready to make its promise of £11 billion in infrastructure investment legally binding and roll it out at the pace it has promised.
“We work closely with the CMA … they are provisional findings meaning that we work with the CMA over the coming three months to address any of their concerns,” Essam said.
The CMA will issue its final report by Dec. 7 this year.
Tik Tok creators gather before a press conference to voice their opposition to the “Protecting Americans from Foreign Adversary Controlled Applications Act,” pending crackdown legislation on TikTok in the House of Representatives, on Capitol Hill in Washington, U.S., March 12, 2024.
Craig Hudson | Reuters
The Supreme Court on Friday will hear oral arguments in the case involving the future of TikTok in the U.S., which could ban the popular app as soon as next week.
The justices will consider whether the Protecting Americans from Foreign Adversary Controlled Applications Act, the law that targets TikTok’s ban and imposes harsh civil penalties for app “entities” that continue to carry the service after Jan.19, violates the U.S. Constitution’s free speech protections.
It’s unclear when the court will hand down a decision, and if China’s ByteDance continues to refuse to divest TikTok to an American company, it faces a complete ban nationwide.
What will change about the user experience?
The roughly 115 million U.S. TikTok monthly active users could face a range of scenarios depending on when the Supreme Court hands down a decision.
If no word comes before the law takes effect on Jan. 19 and the ban goes through, it’s possible that users would still be able to post or engage with the app if they already have it downloaded. However, those users would likely be unable to update or redownload the app after that date, multiple legal experts said.
Thousands of short-form video creators who generate income from TikTok through ad revenue, paid partnerships, merchandise and more will likely need to transition their businesses to other platforms, like YouTube or Instagram.
“Shutting down TikTok, even for a single day, would be a big deal, not just for people who create content on TikTok, but everyone who shares or views content,” said George Wang, a staff attorney at the Knight First Amendment Institute who helped write the institute’s amicus briefs on the case.
“It sets a really dangerous precedent for how we regulate speech online,” Wang said.
Who supports and opposes the ban?
Dozens of high-profile amicus briefs from organizations, members of Congress and President-elect Donald Trump were filed supporting both the government and ByteDance.
The government, led by Attorney General Merrick Garland, alleges that until ByteDance divests TikTok, the app remains a “powerful tool for espionage” and a “potent weapon for covert influence operations.”
Trump’s brief did not voice support for either side, but it did ask the court to oppose banning the platform and allow him to find a political resolution that allows the service to continue while addressing national security concerns.
The short-form video app played a notable role in both Trump and Democratic nominee Kamala Harris’ presidential campaigns in 2024, and it’s one of the most common news sources for younger voters.
In a September Truth Social post, Trump wrote in all caps Americans who want to save TikTok should vote for him. The post was quoted in his amicus brief.
What comes next?
It’s unclear when the Supreme Court will issue its ruling, but the case’s expedited hearing has some predicting that the court could issue a quick ruling.
The case will have “enormous implications” since TikTok’s user base in the U.S. is so large, said Erwin Chemerinsky, dean of Berkeley Law.
“It’s unprecedented for the government to prohibit platforms for speech, especially one so many people use,” Chemerinsky said. “Ultimately, this is a tension between free speech issues on the one hand and claims of national security on the other.”
WATCH: It appears TikTok could really get shut down, says Jim Cramer
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports9 months agoStory injured on diving stop, exits Red Sox game
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports3 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business2 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway