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Freedom251 › Blog › CMA

What the CMA can do when it investigates a UK telecoms merger

By Freedom251 Team · · 9 min read

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The Competition and Markets Authority (CMA) can investigate a UK telecoms merger before or after it completes. It may order the businesses to remain separate while it investigates, clear the transaction, refer it to a deeper Phase 2 inquiry, require remedies, block an anticipated merger or, in exceptional cases, unwind a completed deal.

UK merger notification is generally voluntary, but voluntary notification is not immunity from review. Ofcom can supply communications-sector expertise and help oversee specific commitments; the CMA remains the merger investigator and decision-maker.

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What legal question does the CMA ask?

The regime is based on the Enterprise Act 2002. The CMA first asks whether the transaction creates a relevant merger situation. It then assesses whether the merger has resulted, or may be expected to result, in a substantial lessening of competition (SLC) in a UK market.

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That analysis is case-specific. The CMA’s guidance warns against treating economic models or other analytical methods as rigid, automatic rules. The authority defines the relevant products, services and geographic areas, examines how the parties compete, and tests the evidence about likely effects. A telecoms transaction is not assessed under a special SLC test simply because it involves mobile, fixed-line, broadband or communications infrastructure.

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Can the CMA investigate a merger that has already completed?

Yes. Unlike a mandatory pre-clearance system, the UK regime normally lets parties decide whether to notify. They can complete without first obtaining CMA clearance, but the CMA can open an investigation later if it believes the deal may raise competition concerns.

Completion can therefore create immediate practical risk. If the businesses integrate before or during an investigation, the CMA can impose interim measures to preserve the competitive position that existed before completion. The authority says it usually imposes such measures on businesses that complete before an investigation and will act quickly when a merger completes during an investigation.

How a CMA merger investigation unfolds

The public process has two substantive stages, with interim controls available throughout. A typical sequence is:

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  1. Jurisdiction and information gathering: the CMA considers whether there is a relevant merger situation and requests information from the parties, customers, competitors and other stakeholders.
  2. Phase 1 screening: it applies the realistic-prospect threshold to decide whether the merger may lead to an SLC.
  3. Phase 1 outcome: the CMA can clear the deal, accept undertakings in lieu of a Phase 2 reference, or refer the transaction.
  4. Phase 2 inquiry: an independent inquiry group conducts a deeper investigation using the balance-of-probabilities test.
  5. Final remedies or clearance: the inquiry group clears the merger or determines what action is needed to remedy, mitigate or prevent any SLC and its adverse effects.

Phase 1: the initial screen

The realistic-prospect threshold

At Phase 1, the CMA asks whether there is a realistic prospect that the merger may result in an SLC. This is an initial screening standard, not a final finding that competition will be harmed. The CMA can examine issues such as higher retail prices, reduced service quality, slower innovation, weaker investment incentives, reduced choice, or less favourable terms for wholesale customers.

How long Phase 1 takes

The CMA’s public process guide gives a 40-working-day deadline for the Phase 1 decision, counted from the formal launch of the investigation. Information requests, delays in receiving material and the exact procedural circumstances can affect how a case progresses, so the headline timetable should not be treated as a guaranteed completion date for every transaction.

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Possible Phase 1 outcomes

  • Clearance: the CMA finds no competition concern requiring a reference.
  • Reference to Phase 2: the realistic-prospect test for an SLC is met and the concerns are not resolved at Phase 1.
  • Undertakings in lieu (UILs): before making a reference, the parties may offer legally binding measures designed to address the identified competition problem.

The CMA’s guidance identifies limited circumstances in which it may use discretion not to refer even when the realistic-prospect threshold is met. These include a market of insufficient importance, some anticipated mergers that are not sufficiently advanced or likely, and relevant customer benefits that outweigh the SLC and its adverse effects. These are narrow, fact-dependent exceptions, not automatic safe harbours.

Interim measures: how the CMA can keep the businesses separate

Interim measures are temporary legal restrictions designed to preserve the CMA’s ability to investigate and, if necessary, remedy a competition problem. They can apply after completion or while a transaction is under investigation.

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What restrictions can require

  • Separate sales operations and separate brand identities.
  • Continuation of the pre-merger range of goods and services.
  • Retention of important employees and management capability.
  • Separation of confidential, commercially sensitive and strategic information.
  • Limits on transferring assets, customers, staff or operational functions between the businesses.

In practical terms, the parties may have to continue competing as though they were independent companies while the CMA works through the evidence. A party can request a derogation for conduct that an interim order would otherwise restrict. The CMA assesses each request case by case; a derogation is not an entitlement to integrate normally.

Phase 2: the deeper investigation

Who decides?

Phase 2 is decided by an independent inquiry group supported by CMA staff. This separation from the initial screening team is intended to provide a fresh, detailed assessment of the evidence and proposed remedies.

The balance-of-probabilities test

At Phase 2, the question is whether an SLC is more likely than not. The inquiry group examines the parties’ internal documents, commercial plans, customer and competitor evidence, economic analysis and claimed efficiencies or investment benefits. It also tests whether those benefits are merger-specific, likely to occur and sufficient to offset the identified harm.

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Phase 2 timetable

The CMA’s public guide gives a 24-week Phase 2 deadline, with an extension of up to eight weeks in special circumstances. The timetable covers the investigation and decision process, including consideration of remedies where an SLC is found.

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Phase 2 outcomes

  • Clearance: the inquiry group finds no SLC.
  • Clearance with remedies: the deal can proceed or remain in place subject to binding conditions.
  • Blocking an anticipated merger: the parties are prevented from completing the transaction.
  • Unwinding a completed merger: assets or businesses can be separated as a last-resort remedy when other measures cannot address the SLC.

If the parties do not offer appropriate remedies, the CMA can determine remedies itself. The remedy decision is directed at the competition problem and the resulting adverse effects, rather than at punishing the parties for notifying late or completing without clearance.

What remedies can the CMA impose?

Remedies generally fall into two broad categories. The right choice depends on the source of the SLC, how quickly it must be addressed, and whether compliance can be monitored reliably.

Remedy type What it changes Typical use
Structural The ownership or composition of the merged business, such as selling a network asset, customer base or other business unit. Used when the competition problem is best solved by restoring an independent competitor or removing an overlapping asset.
Behavioural The merged company’s conduct, prices, terms, access arrangements, information handling or investment commitments. Used when a specific harmful behaviour can be defined, monitored and enforced over time.

A structural remedy can be more durable because it changes market structure, but it may be complex to design and execute. A behavioural remedy can target a precise concern while allowing efficiencies from the merger, yet it may require continuing supervision and can be difficult to enforce if the obligation is vague or conditions change.

Why Ofcom matters in telecoms cases

Ofcom is the UK’s independent regulator and competition authority for communications sectors. It can contribute technical and market expertise on mobile networks, fixed communications, spectrum, wholesale access, consumer protection and related issues. The CMA’s Vodafone/Three materials record that the CMA sought Ofcom’s input.

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This is cooperation between distinct authorities, not a transfer of merger control to Ofcom. The CMA makes the merger decision under the Enterprise Act framework. Ofcom may have a role in monitoring or overseeing particular telecoms commitments where its sector expertise and regulatory functions are relevant.

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What the Vodafone/Three case shows

The proposed Vodafone/Three combination would have brought together two of the UK’s four mobile network operators at the time of the CMA’s Phase 1 decision. The CMA found a realistic prospect of an SLC and referred the transaction to Phase 2.

Concerns examined

  • Possible higher prices or reduced service for retail mobile customers.
  • Weaker wholesale terms for mobile virtual network operators.
  • Whether claimed network-investment benefits would be delivered.
  • How uncertainty about those benefits affected the competitive assessment.

The CMA’s December 2024 announcement described the proposed combination as representing 27 million subscriptions. That was the CMA’s figure for the deal at that time, not a current count of UK subscriptions, operators or market share.

Conditional clearance and commitments

The final decision allowed the merger subject to legally binding commitments that combined network, retail and wholesale protections:

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  • A joint network plan.
  • Capped prices for selected retail tariffs and data plans for three years.
  • Preset wholesale prices and terms for mobile virtual network operators for three years.

Ofcom and the CMA were to oversee the network commitment. The CMA was responsible for monitoring and enforcing the specified retail and wholesale protections. The case demonstrates how a telecoms clearance can combine a sector-specific network obligation with time-limited safeguards for both retail and wholesale customers.

What happens to a deal that cannot be fixed?

If the CMA concludes that an SLC exists and no workable remedy addresses it, the consequences depend on whether the transaction is anticipated or completed. An anticipated merger can be blocked before completion. A completed merger can, in an appropriate case, be unwound by requiring divestiture or another separation of the businesses.

Unwinding is a last resort. The CMA first considers whether structural or behavioural measures can effectively remedy, mitigate or prevent the SLC and the resulting adverse effects. The remedy must be practical, enforceable and proportionate to the identified problem.

How the 2025 remedies guidance affects live cases

The CMA revised its merger remedies guidance in December 2025. The revision took effect on 19 December 2025 for cases whose formal Phase 1 investigation commenced on or after that date. It embeds a “4Ps” framework: pace, predictability, process and proportionality.

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For a live matter, the relevant version depends on the formal Phase 1 start date, not simply the date the transaction was announced or completed. Parties and advisers should therefore check the guidance version that applies to the case’s procedural start date.

Current case status can change

The CMA case finder listed a separate BT/TalkTalk merger inquiry as open, with an opening date of 5 October 2026, when that listing was accessed on 13 October 2026. Case status, deadlines and procedural steps can change, so anyone relying on that example should verify the current case page before treating it as active or drawing conclusions from its timetable.

What telecom companies should do when a CMA inquiry is possible

  1. Map the overlap: identify every UK product, customer group, network layer and wholesale relationship where the parties compete or could compete.
  2. Preserve evidence: retain strategic documents, pricing materials, investment plans, customer analyses and communications relevant to the merger rationale and competitive effects.
  3. Prepare for separation: plan how sales, brands, staff, systems and confidential information can remain separate if interim measures are imposed.
  4. Assess notification strategy: voluntary notification avoids no review risk; the parties should weigh the benefits of early engagement against the possibility of investigation after completion.
  5. Develop remedy options: distinguish measures that address the actual SLC from broad promises that are difficult to monitor or enforce.
  6. Coordinate sector expertise: anticipate questions that may come from both the CMA and Ofcom, especially on network investment, wholesale access and service quality.

What readers should remember

  • The CMA can investigate a UK telecoms merger even after it has completed.
  • Interim measures can require the businesses to remain operationally separate during the investigation.
  • Phase 1 uses a realistic-prospect threshold and normally has a 40-working-day decision deadline from formal launch.
  • Phase 2 is decided by an independent inquiry group using the balance-of-probabilities test, with a public guide timetable of 24 weeks plus up to eight weeks in special circumstances.
  • The CMA can clear, refer, accept or impose remedies, block an anticipated merger or unwind a completed one when necessary.
  • Ofcom contributes communications-sector expertise, but the CMA remains responsible for the merger decision.

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CMAcompetition lawmerger controlOfcomUK telecoms

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