In most markets, consumers are best served when regulators foster fierce competition. Telecoms bosses have long argued that their sector should be an exception. They increasingly appear to be right.
European competition authorities have largely dismissed the sector’s pleading as self-serving twaddle. The industry and its beleaguered investors are looking to the UK’s Competition and Markets Authority — currently investigating a proposed tie-up between Vodafone’s UK operations and Three UK — for inklings of change.
It is not difficult to see why the CMA plans a full inquiry into the proposed tie-up. Together, Vodafone and Three would create a mobile operator with 30 per cent of the UK market, just behind leader BT. The larger entity, the CMA fears, might be less motivated to compete aggressively than two relative minnows fighting for survival. A less fragmented market may also result in resellers such as Sky and Tesco Mobile paying more to piggyback on their networks, leading to higher prices for consumers.