The Competition and Markets Authority (CMA) has released submissions from stakeholders regarding the proposed merger between Vodafone and Three UK, with BT prominently opposing the merger.
During the second phase of its investigation, the CMA sought input from interested parties on the merger's potential market impact, which includes reducing the number of UK operators from four to three.
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The CMA has published ten responses, some anonymously, with BT's submission being the most extensive and openly critical of the merger.
The 40-page document comprehensively outlines its opposition, highlighting concerns that the merger would result in a combined entity holding an unusually large share of capacity and spectrum, a situation deemed unprecedented in both UK and Western European mobile markets. This, according to BT, would significantly reduce competition and discourage investment.
The document stated that the merger would form a combined entity holding a 'dominant' 61% share of the UK’s mobile network capacity, leading to 'capacity asymmetry' between this entity and other operators. “As a result, the merged entity would be able to credibly threaten to deploy capacity strategically to undermine the business case and, therefore, reduce the incentive for rivals to invest in their respective mobile networks,” the documented said.
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“Overall, BT believes that the combination of extreme capacity and spectrum asymmetry arising from the merger, along with the unprecedented access that the merged entity will have to BT's (as well as to VMO2's) strategic investment plans, and the merged entity's ability and incentive to disrupt the effective functioning of MBNL, will give rise to a substantial lessening of competition in UK mobile telecoms markets, ultimately resulting in higher prices, poorer network quality, and reduced incentives to invest; all to the detriment of UK consumers,” added BT.
In contrast, Ericsson argued that the deal could establish a market structure that is more sustainable.
“Consolidation is broadly seen as a pivotal measure towards helping operators attain the necessary scale for expanding their future network infrastructure,” commented the Swedish vendor.
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