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

LONDON (Reuters) – Britain’s antitrust watchdog is examining whether a $19 billion tie-up between Vodafone (NASDAQ:)’s UK operation and CK Hutchison’s Three UK would substantially lessen competition, it said on Wednesday.

The Competition and Markets Authority (CMA) invited comments from interested parties on the deal announced in June which would create the UK’s biggest mobile operator.

The CMA is gathering information before it starts a formal Phase 1 investigation in the next few months that must then be completed within 40 working days. If it finds the deal could lead to less competition, it will launch a deeper investigation that lasts 24 weeks.

The deal will reduce the number of networks to three from four, challenging a tenet long held by regulators that having four in major markets helps keep prices low.

A proposed tie-up between Three UK and Telefonica (NYSE:)’s O2 in Britain was blocked by the European Commission in 2016 on the grounds that a reduction to three networks would reduce competition and likely result in higher prices.

Vodafone and Three UK have pledged to invest 11 billion pounds ($13.5 billion) to create “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 be carefully considering how this deal may affect competition in the UK, which could affect the options and prices available to customers.

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

Vodafone said it was “actively engaging with the CMA” and welcomed their move to invite views from third parties.

“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 competition,” a spokesperson said.

Three UK declined to comment.

($1 = 0.8143 pounds)