Vodafone and Three Merger

On 31 May, Vodafone and CK Hutchison completed the merger of their UK mobile businesses, creating VodafoneThree. First announced in June 2023, the deal reduced the number of UK mobile network operators from four to three, leaving the combined business alongside EE and Virgin Media O2 with around 27 million customers and 46% of UK mobile spectrum.

The CMA referred the deal to a Phase 2 investigation in April last year. It provisionally found that the merger could substantially lessen competition in both the retail and wholesale mobile markets, with the risk of higher prices for customers and worse terms for virtual operators that rent capacity on the major networks. The parties argued that combining two smaller networks would fund a far better 5G network, but the CMA was concerned that nothing would force them to deliver it once the deal had closed.

The CMA cleared the merger in December subject to legally binding commitments. The main one requires VodafoneThree to deliver a joint network plan backed by £11 billion of investment over eight years, monitored by the CMA and Ofcom. This is supported by caps on selected tariffs and data plans for three years and protections on wholesale terms for virtual operators. Final undertakings were accepted in March and the merger completed on 31 May, with Vodafone holding 51% and CK Hutchison 49%.

The deal stood out because the CMA has long preferred structural remedies, such as selling off part of a business, as they are a one-off fix that does not need policing. Clearing a four-to-three merger on behavioural commitments marked a clear change in approach, and came at a time when the government was pushing the CMA to give more weight to growth and investment.

Overall, the merger is a useful example of how merging parties can turn their own investment case into an enforceable remedy, and it is likely to be the reference point for future consolidation in concentrated UK markets.