UK regulator examining Vodafone-Hutchison’s $19-B mobile merger

LONDON – Britain’s antitrust watchdog is investigating whether a $19 billion tie-up between Vodafone’s British unit and CK Hutchison’s Three UK would materially reduce competition, it said on Wednesday.

The Competition and Markets Authority (CMA) asked interested parties to comment on the deal announced in June, which would create the UK’s largest mobile operator.

The CMA is gathering information before launching a formal Phase 1 investigation in the coming months, which should then be completed within 40 working days. If it finds that the deal could lead to less competition, it will launch a deeper investigation that will last 24 weeks.

The deal will reduce the number of networks from four to three, going against the principle long held by regulators that having four networks in major markets keeps prices low.

A proposed tie-up between Three UK and Telefonica’s O2 in Britain was blocked by the European Commission in 2016 because a reduction to three networks would reduce competition and likely lead to higher prices.

Vodafone and Three UK have pledged to invest 11 billion pounds ($13.5 billion) in creating “one of Europe’s most advanced standalone 5G networks” in a bid to win over politicians, unions and competition authorities.

CMA Chief Executive Sarah Cardell said: “We will carefully consider how this deal may impact competition in Britain, which could impact the options and prices available to customers.

“We will also assess how this may impact incentives to invest in the quality of UK mobile networks.”

Vodafone said it was “actively working with the CMA” and welcomed their initiative to seek third-party views.

“We want to build one of Europe’s leading 5G networks and believe the combination of Vodafone UK and Three UK will be great for customers, the country and the competition,” a spokesperson said.

Three UK declined to comment.