Union claims Vodafone/Three merger would ‘deepen existing structural inequalities’

We know about this because the UK Competition and Markets Authority published a letter Unite sent it on the matter. The union had previously objected to the merger on the reasonable assumption that it would result in job losses and, prior to that, rather more speculative national security concerns.

This time it commissioned polling agency Survation to survey 1,000 Three UK customers, with the questions designed to address what effects the merger will have on the supply of mobile services, which is one of the core criteria for the CMA’s phase 2 investigation. Unite’s apparent objective was to demonstrate how the merger would harm to the UK mobile market, with Three customers presumed to be those at greatest risk.

“…our polling highlights how the merger, if given the green light, would not only exacerbate the ongoing cost-of-living crisis for consumers, but would also deepen existing structural inequalities, particularly for certain key demographics such low income, female and ethnic minority consumers,” claims the letter.

The main rationale for this conclusion is that, as the UK’s challenger mobile brand, Three offers some of the cheapest tariffs, which it’s apparently assumed would be withdrawn by the merged company. “Given the negative impact of price rises on Three customers overall, it is vital that other intersectional dimensions are also taken into account to fully understand the social impact of the merger," explains the letter.  

“Women and ethnic minority customers are also more likely to face difficulties in paying their mobile and household bills if prices rise post-merger compared to men and those of White ethnicity. For example, based on price increases of £6-10 a month, female Three customers are 9% more likely to struggle to pay their mobile phone bill than male customers, and Black, Asian and Ethnic Minority Three customers are 12% more likely to struggle to pay their mobile phone bill than White customers.”

It feels like a bit of a reach to extrapolate those findings to some kind of broad societal harm but Unite must know that this sort of thing is likely to get the attention of politicians, especially those in the governing Labour party. Of course, all of this is founded on an assumption that the merged company will raise prices, which is far from a foregone conclusion.

The CMA has also published a submission from an anonymised third party which seems to be a UK MVNO, since that market is the focus of it. The mystery objector ‘does not, in particular, recognise the public statements made by the Parties that the Proposed JV will "provide more choice in wholesale partners for the UK's already competitive MVNOs", which appear to [redacted] to be the diametrical opposite of the impact of the Proposed JV.’

It goes on to assert that Three’s competitive weakness has been overstated, as has the relative strength of BT/EE and VMO2, and gets to the nub of the matter by lamenting the current lack of MVNO bargaining power, an issue it claims will be exacerbated by the merger. The submission does little to substantiate the assertion that the current four-player market offers little bargaining power but it’s hard to argue with the claim that removing one of them will make that situation worse for MVNOs.

On the other hand, Three going bust would arguably produce an even worse outcome for MVNOs.