Vodafone’s £15B UK deal cleared with investment commitment

The United Kingdom’s competition authority cleared Vodafone’s £15 billion tie-up with telecom rival Three after the companies pledged to spend billions of pounds to scale up networks.

Vodafone and Three, owned by Hutchison, will also need to cap some mobile tariffs for customers and give certain contractual terms to mobile virtual network operators who use its networks to offer competing services. These aim to resolve concerns that the deal, combining the third- and fourth-biggest U.K. mobile operators, risked increasing prices and harming smaller players.

The approval marks a step change for the Competition and Markets Authority (CMA) by accepting companies’ promise to boost investment. It’s usually pushed for selling off parts of a business to resolve competition problems. The European Commission’s top merger official said last month that he was surprised the CMA would clear the Vodafone deal with such a commitment.

Telecom companies have been pushing for regulators to soften a tough stance on deals after a 2016 veto for a previous U.K. telecoms deal. Mario Draghi’s recent report on making Europe more competitive suggested that officials take companies’ investment needs more seriously.

Stuart McIntosh, chair of the CMA’s independent inquiry group, said that the conditions imposed on the deal mean “the merger is likely to boost competition in the UK mobile sector and should be allowed to proceed.”

Vodafone said the deal was “a once-in-a-generation opportunity to transform the UK’s digital infrastructure.”