Sky has expressed strong opposition to the proposed remedies to safeguard competition resulting from a merger between Vodafone UK and Three UK
Sky has called the remedies suggested by the Competition and Markets Authority (CMA) “weak” and “temporary.” The company argues that the measures fail to adequately safeguard competition in the mobile wholesale market, leaving MVNO’s like Sky Mobile vulnerable to higher costs and reduced service quality.
Sky’s Concerns Over CMA’s Proposals
In its response to the CMA’s remedies working paper, Sky criticised the provisional conclusion allowing the merger, contingent upon specific remedies. These remedies include an eight-year network integration and investment program by the merged entity, maintenance of certain tariffs and data plans for three years, and assurances to offer competitive terms for MVNOs.
Sky contends that these commitments are insufficient to prevent a significant reduction in competition. It points out that the merger would effectively shrink the number of wholesale mobile network suppliers, potentially leading to less favourable terms for MVNOs. Sky argues that this could result in higher prices or diminished service quality for MVNOs and their customers.
Call for Stronger Wholesale Price Regulation
Sky is advocating for stricter, long-term measures to ensure fair and transparent wholesale pricing. The company is demanding that the CMA implement clear and regulated pricing structures to prevent the merged network from imposing excessive charges on MVNOs. This, Sky claims, is essential to maintain a competitive landscape and protect consumer interests.
“Sky is disappointed with the weak, short-term wholesale remedy proposed by the CMA,” the company stated. “The CMA is taking a significant risk by relying on this weak remedy in the hope that sustainable competition will emerge after the network commitment is implemented.”
Long-Term Risks to MVNOs
Sky also highlighted the potential for MVNOs to be sidelined under the current remedy framework. The company expressed concern that the short-term nature of the protections could leave MVNOs unprotected once the remedy expires. Sky further warned that the merged entity could use these remedies to “game” the market, potentially disadvantaging larger MVNOs.
“We strongly urge the CMA to err on the side of caution and extend the time frame of this protection,” Sky added. “The merger will set the permanent structure of this critical market, which affects millions of consumers and businesses, and threatens the feasibility of MVNO businesses.”
The CMA’s Balancing Act
The CMA faces a challenging task in balancing the benefits of a merged Vodafone-Three entity against the risks to competition. Proponents of the merger argue it would lead to greater investment in mobile infrastructure and improved services. However, critics like Sky warn that without robust, enforceable safeguards, the merger could harm competition, leading to fewer choices and higher costs for consumers.
Sky’s push for stronger, more transparent remedies underscores the high stakes of this merger for the UK mobile market. As the CMA prepares its final decision, the debate highlights the complex interplay between industry consolidation and the need to protect competition in rapidly evolving markets.
Sky full response to the CMA