On Friday 26 January 2024, the parent companies of Three UK and Vodafone UK filed their official merger notification with the Competition and Markets Authority (“CMA”). The notification covers their intent to combine their telecommunication operations by creating a new joint venture and a unified network provider. This much anticipated development raises the crucial question: what happens next and when?

The CMA has swiftly responded by launching a formal investigation into the proposed merger, examining its potential impact on competition for consumers and businesses within the UK. Detailed information on the CMA investigation is available in their Press Release: CMA launches formal investigation into Vodafone/Three merger. The CMA, armed with the information and evidence needed from the merging parties, now has 40 working days until 22 March 2024 to conduct a “Phase 1 investigation”. This phase aims to determine whether the merger poses a realistic prospect of “substantial lessening of competition in the UK” (“SLC”). If so, a more substantial “Phase 2” investigation may follow. The merging parties could modify aspects of the merger (by giving “Undertakings in Lieu”) to resolve any competition concerns at Phase 1, conditional on the CMA’s acceptance.

Sarah Cardell, Chief Executive of the CMA, has gone on to underscore the significance of this process by emphasising that:

“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. The CMA will assess how this tie-up between rival networks could impact competition before deciding next steps.”

The CMA has invited views by 9 February 2024 from any interested parties on how the merger could affect competition. This follows last year’s preliminary invitation to comment (which ran until 12 November 2023). The CMA assures that it will take into account all previously submitted views, eliminating the need for re-submission to the current process.

If the CMA determines a realistic prospect of an SLC during its Phase 1 investigation, it must then commence a more detailed Phase 2 investigation. However, an interesting possibility arises: if the merging businesses offer clear cut Undertakings in Lieu to remedy any identified SLC within 5 working days of the Phase 1 investigation findings being issued, the CMA may decide that a Phase 2 investigation is not required. The merging parties do not have to wait for the Phase 1 findings to start conversations with the CMA regarding appropriate Undertakings in Lieu. It would be surprising if these discussions have not already started.

Assuming that the Phase 2 investigation occurs, it will commence at the end of March and extend for up to 24 weeks (potentially 32 weeks for “special reasons”). During this period, a CMA panel of independent members will conduct an in-depth investigation to assess any SLC from the merger, and recommend any necessary remedies, ranging from business divestments to prohibiting the merger altogether. The CMA must then make an order to accept undertakings from the merging parties to give effect to the Phase 2 remedies. In practice, any final decision and associated conditions for the merger may not be known until December 2024.