Following formal notification, a 40 working day assessment of the merits of the merger now begins before deciding whether a longer (up to 32-week) investigation is required
Parties notify the competition authority of their planned JV
On 26 January 2024, the Competition and Markets Authority (CMA) confirmed that it had opened an official merger inquiry into CK Hutchison Telecom Holdings Limited (CKHGT) and Vodafone Group’s proposed merger of Vodafone and Three in the UK. The deal was announced in June 2023, since which time a ‘pre-notification stage’ has seen closed-door discussions involving the parties (and their lawyers) and the CMA, as well as with other stakeholders such as Ofcom. In October 2023, the CMA launched a preliminary invitation to comment, offering all interested parties the chance to make their views known and present evidence. Following formal notification of the transaction by CKHGT and Vodafone Group, the CMA has now started its Phase I review of Vodafone/Three. As part of its information-gathering process, the CMA has also issued a second invitation to comment (running until 9 February), giving stakeholders a further opportunity to provide input on the impact the proposed merger could have on competition in the UK.
The CMA is considering the merger’s possible impact on consumers and businesses
The CMA has 40 working days to assess the deal as part of its Phase I investigation. This review is designed to identify whether the intended merger may lead to a substantial lessening of competition and – if so – whether a more in-depth (up to 32-week) Phase II investigation is required. The current statutory deadline for the CMA to decide whether to launch that detailed review is 22 March. As we’ve previously discussed, the CMA’s assessment is likely to focus on a number of issues, including operators’ spectrum holdings, networking sharing agreements, access for MVNOs and retail prices for consumers. Some of these could be relatively straightforward to address through traditional mobile merger remedies; however, others (such as the effect on consumers’ bills) could prove more contentious. As the CMA points out, any potential national security concerns would be a matter for the UK Government, which may choose to intervene under the National Security and Investment Act in the event it has concerns.
Vodafone faces uncertainty in Italy and Portugal
As a potential merger in the UK takes a step forward, Vodafone has seen mixed progress in other key markets. On the positive side, in Spain, the CNMC approved Zegona’s €5bn (£4.3bn) acquisition of Vodafone’s assets and subsidiaries, citing a lack of competition concerns in its Phase I review. The EC also stated that the deal did not warrant it conducting an in-depth investigation. However, in Portugal, Vodafone’s proposed acquisition of Nowo could be in jeopardy, with the Autoridade da Concorrência (AdC) reportedly rejecting the commitments offered to get the transaction through. It now seems that new remedies will be required to alleviate the competition authority’s concerns about the impact on consumers and avoid the merger falling through. In Italy, meanwhile, Vodafone’s future appears somewhat uncertain after it rejected Iliad’s second bid for its local opco. While Vodafone is “actively exploring options” for its Italian business, it remains to be seen whether an agreement with any known suitors (e.g. Swisscom’s Fastweb) will materialise.
