UK CMA’s Investigation into Mobile Operators’ Merger “Not Surprising,” Says Schmidt

Partner John Schmidt, who leads the firm’s UK Competition team in London, was quoted in the ICLG article, “UK competition regulator unhappy at mobile giants’ merger.” The article discusses the recent proposed merger between mobile network operators Vodafone UK and Three UK, which is facing increased scrutiny from the UK Competition and Markets Authority (CMA). The CMA argues that the merger could potentially result in higher prices for consumers and a decrease in investment in the UK’s mobile network infrastructure, and as such, the merger warrants a more thorough Phase 2 investigation.

Schmidt told ICLG that it is “not surprising that the CMA feels the need to go into a Phase 2 review where their perspective is that the number of players in the market goes from four to three.” Schmidt added that the CMA will “look at both the effects on the end consumers but also on customers for wholesale deals,” and that “the question is whether a larger third player in a more concentrated market will be a better, more active competitor than having four smaller competitors.”

Schmidt explained that the national security aspects of the review will look at the deal from a “different perspective including what the deal means for the supply of services (some of them sensitive) to the UK government, as well as the potential for sensitive information to flow out of the UK. Only in January national security laws were used to impose additional corporate governance obligation on Vodafone because of Emirates Telecom’s 14.6% stake in Vodafone.”

Read the full article (subscription required).