London investigating merger between Vodafone and CK Hutchison

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The British competition watchdog, the CMA, announced on Friday the opening of an investigation into the merger, announced in June, of the operations in the United Kingdom of the British operator Vodafone and the Hong Kong holding company CK Hutchison.

“This agreement would bring together two of the main players in the British telecommunications market, essential on a daily basis for millions of customers, businesses and the economy as a whole,” argued Sarah Cardell, the director general of the CMA, in a communicated.

“The CMA will assess the impact that this merger between rivals could have on competition before deciding on the next steps,” she added. The regulator opens a so-called “phase 1” investigation, which could lead, if it deems it necessary, to in-depth investigations (phase 2).

This investigation comes after the announcement on Wednesday evening by the British government that the participation of Emirates Telecommunications Group (e&) in Vodafone, of which it became the largest shareholder in 2022 and today holds 14.6%, represents according to it a “risk to national security”.

If London does not ask companies to reconsider their “strategic partnership”, the government has notably imposed the creation of “a national security committee to supervise the sensitive work carried out by Vodafone” and indicated that the composition of the board of directors of the group would be subject to “certain requirements”.

As part of the merger of Vodafone’s British operations with Three UK, Hutchison’s telecoms operator in the United Kingdom, the CMA specifies that it will only rule on competition issues. “National security issues are the responsibility of the British government, which can choose to intervene (…) if it notices problems,” the regulator specifies in its press release.

Vodafone and CK Hutchison hope through the merger to create the leader in telecommunications across the Channel and a champion of 5G, which they hope to value at 16.5 billion pounds (19.3 billion euros). But this operation must still be approved by regulators. Before Brexit, the European Commission, which ensures respect for competition in the EU, had vetoed in May 2016 the proposed takeover of O2 (owned by the Spanish Telefonica), by the Hong Kong conglomerate Hutchison Whampoa ( now CK Hutchison), owner of Three.

Vodafone, in the midst of restructuring, indicated in November that it had fallen into the red during its staggered first half, citing in particular an unfavorable comparison effect after sales a year earlier.

This article is originally published on laliberte.ch

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