Britain’s competition watchdog has signalled that it will open an in-depth investigation into a proposed merger between two of the country’s four mobile-network operators.

Last year, Vodafone UK and Three UK announced plans for a new joint-venture agreement that would bring their 27 million customers under a new, single network provider.

After an initial assessment, the Competition and Markets Authority (CMA) expressed concern that the deal could lead to mobile customers facing higher prices and reduced quality.

The watchdog said that it was concerned that combining the two businesses would reduce rivalry between mobile operators to win new customers.

‘Virtual’ networks

The CMA is also worried that the plan may make it difficult for smaller mobile ‘virtual’ network operators to negotiate good deals for their own customers, by reducing the number of network operators capable of hosting these ‘virtual networks’.

The CMA’s Julie Bon said that the watchdog’s concerns warranted an in-depth investigation “unless Vodafone and Three can come forward with solutions”.

The companies have five working days to respond to the CMA with “meaningful solutions”, otherwise the deal will be referred to a more in-depth investigation.