Vodafone Group PLC (LSE:VOD) and Three have announced further concessions in order to get their proposed business combination cleared by the Competition and Markets Authority (CMA).
The CMA has voiced concerns that the proposed merger, which will reduce the number of network operators in the UK from four to three, will result in a substantial lessening of competition in both the retail and wholesale mobile markets.
Although Vodafone and Three “strongly disagree” with these concerns, they have attempted to placate the regulator with numerous remedies.
Vodafone and Three had already committed to an £11 billion network investment programme, plus a network-sharing agreement with its competitors and Britain’s mobile virtual network operators (MVNOs), to get the deal over the line.
Additional concessions published today include fixing Three’s SMARTY brand tariff at £10 or less for two years following the merger.
Vodafone and Three have also committed to discounted offers for younger and vulnerable customers.
For wholesale customers, they said they “will provide a reference offer that encourages MVNOs – the fastest growing part of the market – to access our additional network capacity to offer great deals to retail customers”.
However, the two companies remain opposed to the CMA’s ‘ringfencing’ proposals which involve setting aside a proportion of the merged company's network capacity exclusively for these MVNOs.
The intent of this remedy is to ensure that MVNOs, which rely on access to the mobile network infrastructure, continue to have sufficient capacity to serve their customers at competitive terms after the merger.
Vodafone and Three believe this will “undermine” the benefits of the merger.
The duo will find out if these proposals are sufficient on 7 December, which is the deadline for the CMA’s final decision.