UK Infrastructure

Vodafone and Three have rejected claims by the UK's competition watchdog that their proposed merger would lead to higher prices for millions of mobile users.

The Competition and Markets Authority (CMA) has "provisionally concluded" the deal would weaken competition between mobile networks.

It has particular concerns that customers who are least able to afford mobile services would be most affected.

The findings are the latest from the CMA's ongoing probe into the merger, which it launched in January.

The regulator will now consult on its findings and potential solutions to its worries over competition.

These solutions could include legally binding investment commitments, and measures to protect both retail and wholesale customers.

Vodafone's CEO for European Markets, Ahmed Essam, told the Today programme, on BBC Radio 4, that he still believed the merger would make a better network for customers, and add to the competition in the market.

"We've made a significant commitment to an £11bn investment," he said.

"We're willing to make sure that this is legally binding, and we undertake a commitment to deploy this."

He also said the firm had already traded part of its radio spectrum with a competitor.

But the CMA said it is "not convinced" that it would be good for consumers.

"The main knockback to the merging parties is that the CMA considers claims of superior network quality post integration to be "overstated"," said Kester Mann from analysis firm CCS Insight.

But he said the regulator was not shutting the door on the deal.

"Vodafone and Three should be encouraged by the tone of the CMA's report, which appears more open to the merger than I was expecting."

But Rocio Concha, director of policy and advocacy at consumer group Which?, took a different view.

"The regulator's finding has set a high bar for the merger to proceed," she said.

"It is clear from those findings that the planned merger between Vodafone and Three could have a negative impact on millions of consumers."

But she warned it would be "challenging" for the regulator to find remedies for its concerns.