The potential merger between Vodafone and Three could "lead to higher prices for customers", the Competition and Markets Authority (CMA) has stated.

Following an investigation into the potential deal between two of the four UK mobile network operators, the regulator said that it could also "affect investment" in networks across the country.

The CMA launched its initial phase one investigation in January after it was notified of the deal.

The review is designed to identify whether the deal may lead to a "substantial lessening of competition", focusing on the potential impact on consumers and UK businesses.

The merger is part of a revamp of Vodafone’s operations, which has seen it sell its Spanish and Italian operations in October 2023 and March respectively.

According to the CMA, while the deal could lead to higher prices and reduced quality, it isalso “concerned” that the deal may make it difficult for smaller mobile ‘virtual’ network operators, including Sky Mobile, Lebara and Lyca Mobile, to "negotiate good deals for their own customers, by reducing the number of mobile network operators".

Phase one decision maker for the case at the CMA, Julie Bon, said: "Millions of people in the UK depend on effective competition in the mobile market in order to access the best deals for them.

"Whilst Vodafone and Three have made a number of claims about how their deal is good for competition and investment, the CMA has not seen sufficient evidence to date to back these claims.

"Our initial assessment of this deal has identified concerns which could lead to higher prices for customers and lower investment in UK mobile networks. These warrant an in-depth investigation unless Vodafone and Three can come forward with solutions."

Vodafone and Three have five working days to respond with "meaningful solutions" to the CMA, otherwise the deal will be referred to a more in-depth phase two investigation.

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