The United Kingdom's Competition and Markets Authority (CMA) said on Friday, Jan. 26, that it would initiate an inquiry into the planned merger between Vodafone and Three Mobile Networks. Three UK is controlled by the multinational conglomerate corporation CK Hutchison.

The primary concern of the UK's competition regulator is whether the merger would significantly reduce competition, as stated by the watchdog. The CMA may proceed with a more thorough inquiry if this is confirmed.

Merger of Two Major Players

The merger would unite two industry heavyweights in the UK telecoms sector, which is vital for the country's companies, daily consumers, and the economy as a whole, according to CMA CEO Sarah Cardell. "The CMA will assess how this tie-up between rival networks could impact competition before deciding next steps," she stated, as reported by CNBC.

Within 40 business days, the CMA must review the agreement and make a decision.

Last year, the parties agreed to integrate the two companies, giving Vodafone 51% control and CK Hutchison the remaining minority position. Ahmed Essam, now the CEO of Vodafone UK, will head the combined company. Meanwhile, Darren Purkis, currently the chief financial officer of Three UK, will take over that same role for the merged business.

See Also: FTC to Investigate AI Deals of Tech Giants Microsoft, Amazon, and Google

Starting at the tail end of 2022, when previous CEO Nick Read resigned, Vodafone has been undergoing a period of upheaval. Last April, Margherita Della Valle was named permanent CEO of the business group with the intention of transforming the organization.

In a joint statement released on Friday, Vodafone and Three justified the deal.

"We strongly believe that the proposed merger of Vodafone and Three will significantly enhance competition by creating a combined business with more resources to invest in infrastructure to better compete with the two larger converged players," Essam said, adding that Vodafone is looking forward to carrying on the fruitful discussions with the CMA now that the official procedure has started.

Scrutinizing Large Mergers, Acquisitions

Huge mergers and acquisitions have lately come under the scrutiny of the CMA, which is becoming more influential.

In fact, before finally giving the green light to Microsoft's $69 billion purchase of game company Activision Blizzard last year, the CMA delayed the transaction.

Following years of intense mergers and acquisitions in the UK telecoms market, this merger of Vodafone's UK operations with Three UK will bring the total number of mobile providers down to three.

See Also: Warren Buffet-Led Firm Berkshire Hathaway Buys Remaining 20% Stake in Pilot Travel From Haslam Family