© Reuters. Branding is displayed for Vodafone at one of its stores in London, Britain, June 14, 2023. REUTERS/Toby Melville/ File Photo
LONDON (Reuters) -Britain’s antitrust watchdog has launched an investigation into the $19 billion merger between Vodafone (NASDAQ:)’s UK operation and CK Hutchison’s Three UK, reviewing whether the deal will hurt competition, it said on Friday.
The tie-up announced last year will reduce the number of mobile networks in Britain from four to three.
The Competition and Markets Authority (CMA) has 40 working days to complete its initial investigation, which is likely to lead to an in-depth, phase two probe lasting 24 weeks.
“This deal would bring together two of the major players in the UK telecommunications market, which is critical to millions of everyday customers, businesses and the wider economy,” said CMA Chief Executive Sarah Cardell.
“The CMA will assess how this tie-up between rival networks could impact competition before deciding next steps.”
The companies pledged to invest 11 billion pounds ($14 billion) to create “one of Europe’s most advanced standalone 5G networks” in an effort to win over politicians, unions and competition authorities.
Vodafone UK Chief Executive Ahmed Essam, who will lead the combined group, said consumers would benefit.
“We look forward to continuing the constructive conversations (with the CMA) now that the formal process has begun,” he said.
Regulators have previously blocked some deals that reduce the number of networks from four to three.
A 2016 British merger between Three UK and Telefonica (NYSE:)’s O2 was stopped by the European Commission because it was considered likely to result in higher prices.
After Brexit, it will be up to the CMA to rule on the Vodafone-Three deal.
Last year the CMA blocked Microsoft (NASDAQ:)’s $69 billion acquisition of Activision Blizzard (NASDAQ:) but later approved the deal after reopening the case.
The CMA could block the Vodafone deal or accept it, with or without remedies. Cardell said in November that the CMA preferred structural remedies.
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