A £15bn merger between Vodafone and Three is on course to be given the green light after Sir Keir Starmer vowed to “rip up” red tape blocking investment in Britain.
The two mobile operators have been told they must freeze prices for the next three years if they want their tie-up to be approved by the Competition and Markets Authority (CMA).
Regulators also demanded that the new companies must make a legally binding commitment to roll out 5G high speed mobile internet in Britain following an in-depth investigation.
The CMA set out its conditions for approving the tie-up, which would create the UK’s largest mobile network. It comes after the Prime Minister laid out plans last month to boost economic growth by tearing down planning barriers and “ripping up the bureaucracy that blocks investment”.
Speaking at an international investment summit in the City of London, he told the leaders of 300 of the world’s biggest firms it was “time to back Britain”.
The CMA concluded in September that the Vodafone and Three deal could lead to higher prices for customers and could harm the position of rival mobile virtual network operators, such as Sky Mobile, Lyca, Lebara and iD Mobile.
However, it said an agreement to invest in the rollout of 5G over the next eight years across the UK would help allay its concerns, as well as a commitment to retain certain existing mobile tariffs and data plans for at least three years.
Stuart McIntosh, chairman of the CMA’s inquiry group leading the investigation, said the view of the regulator had not changed despite the Prime Minister urging it to prioritise growth.
He told BBC Radio 4’s Today programme: “The CMA’s general position is that strong competition promotes innovation, investment and growth.
“If we look at the Vodafone and Three case, were we to conclude that the merger should be cleared on competition grounds, that, in part, would be because there’s a positive impact of the legally binding commitment on network investments.
“And it is also, therefore, likely to be positive for growth.”
Vodafone and Three said in a joint statement that they would need to study in detail the CMA’s proposals but “so far, the companies believe it provides a path to final clearance”.
A spokesman said: “An appropriate balance appears to have been struck by ensuring that the significant benefits of the merged company’s investments can be realised in full and at pace to the benefit of the country and its citizens, while addressing the CMA’s stated concerns.
“However, it is essential that balance is preserved through to the end of the process, reflecting that the parties have offered extensive remedies, including by making their future network roll-out fully enforceable.”
The CMA’s final decision on the merger is due by December 7.