The regulator says a merger between Vodafone and Three could go ahead – if both companies make price promises for consumers and commit to boosting the UK’s 5G rollout.
The Competition and Markets Authority (CMA) had previously said that creating what would be the country’s biggest mobile network could drive up prices and harm competition.
But it has now provisionally concluded those concerns could be addressed – and the merger could proceed – if the firms agree to its proposed remedies.
A Vodafone spokesperson said both companies would need to study the CMA’s proposal more closely but believed on first impressions it “provides a path to final clearance”.
They insisted, as they have throughout, that the deal was in everyone’s interests.
“It will bring significant benefits to businesses and consumers throughout the UK, and it will bring advanced 5G to every school and hospital across the country,” they said.
The CMA’s findings are the latest step in its probe into the merger, which began in January.
Vodafone and Three announced their plans to merge their UK-based operations in June last year.
Their combined network would have around 27 million customers.
“We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are addressed,” said Stuart McIntosh, who is leading the CMA panel investigating the merger.
“We anticipate in the longer term that the significant commitment to upgrade the merged companies network over the next 10 years or so will ultimately create a competitive environment that will maintain the competition we’ve seen in mobile in recent years,” he told the Today programme, on BBC Radio Four.
But he also made clear that short term commitments not to increase the price of certain existing mobile tariffs and data plans for at least three years were also key to making sure consumers did not lose out.
The regulator also said upholding pre-agreed deals or prices with Mobile Virtual Network Operators such as Sky Mobile, Lyca and Lebara could protect consumers and and wholesale customers alike.
Industry analyst Paolo Pescatore told the BBC it marked “another key step towards approval” and showed all concerned were trying to find a way to make the deal happen.
The two largest players in the market are currently EE and 02 – Mr Pescatore said a merged Vodafone and Three would be in a better place to take them on.
“To date, both parties are demonstrating that this is genuinely in the interest of UK plc, the economy, and users which paves the way for a far stronger three-player market than the current imbalance,” he said.
The CMA is seeking responses to its proposed remedies by 12 November, with a deadline of 7 December for a final decision on the merger.
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