The formal investigation launched into the proposed merger was launched in January 2024. At the end of the initial Phase 1 investigation, the CMA found that a ‘Phase 2’ merger inquiry was required.
This means that the CMA will investigate the impact of the potential merger on competition in the telecoms sector in more detail.
The CMA says it will assess how the deal between rival networks could impact competition in the space before deciding on next steps.
How the investigation will work
The merger investigation will go through six stages. This is shown in the diagram below:
Phase 1 investigation
The CMA first carries out an initial review of the merger to determine whether there is a realistic prospect of a substantial lessening of competition.
If the CMA isn’t concerned about the merger, it clears it. But if there are competition concerns that are not solved following its initial review, the CMA carries out a more in-depth investigation, known as Phase 2.
In this investigation, the CMA completed its Phase 1 investigation in March 2024.
Vodafone and Three responded to the initial Phase 1 investigation by stating the merger would yield “immediate benefits” to the UK public.
Phase 2 investigation begins
At Phase 2, the CMA will build on the work at Phase 1 and gather more evidence from the merging businesses and others to investigate potential issues with competition that could arise as a result of the merger.
The CMA will meet with the businesses proposing to merge and their representatives ‘on site’ to learn more about their business.
Every Phase 2 inquiry is run by an appointed inquiry group. This is an independent panel made up of 3 to 5 people with a range of business, finance, economic and legal experience. They are responsible for making the final decision on the case.
For Vodafone/Three, the CMA began a Phase 2 investigation in April 2024. The inquiry group was appointed at the same time.
Issues Statement published
The Issues Statement shows the focus of the Phase 2 investigation and sets out what are called ‘theories of harm’, which are the potential concerns being investigated.
At this point anyone, including members of the public, is invited to share their views with the CMA.
Analysis of evidence
After publishing the Issues Statement, the CMA continues gathering and reviewing evidence. Hearings are held with the main parties (and sometimes third parties) to ask questions about the evidence received and explore key issues.
If the inquiry group thinks the merger could have a negative impact on competition, it will also start thinking about potential solutions to those concerns (known as ‘remedies’).
Provisional findings
Once the inquiry group has a good understanding of the business of the organisations proposing to merge, and a strong evidence base, it will publish the ‘provisional findings’.
This document outlines the provisional decision on the merger.
If there are concerns, the inquiry group will also send the merging businesses its thoughts on possible solutions, in a document referred to as a ‘remedies notice’.
Final report
This includes the final decision on the merger, including whether the inquiry group believes it would harm competition for consumers or businesses in the UK.
If the inquiry group finds no competition concerns, the merger can go ahead as planned.
If the inquiry group finds that the merger may be expected to result in a substantial lessening of competition, it will decide how its concerns should be remedied. For example, this can include selling part of the business or prohibiting the merger altogether.
