The U.K.’s Competition and Markets Authority said the proposed merger between Vodafone and Three would lead to a “substantial lessening of competition in the U.K.” phone market

The £16bn merger planned between networks Vodafone and Three UK could lead to higher bills for tens of millions more customers, the UK’s competition watchdog warned. The proposed merger will create Britain’s largest mobile phone operator with around 27 million customers but cut the number of mobile service providers from four to three.

Tens of millions of Vodafone and Three UK customers could have their bills increased or a reduced service, warned a watchdog. A merger planned between the two companies is being investigated by the Competition and Markets Authority (CMA).

Vodafone’s agreement to merge its U.K. business with rival operator Three raises competition concerns, the U.K.’s antitrust authority said, creating uncertainty on a deal poised to shake up the country’s telecommunications market.

Britain's competition regulator said Vodafone's $19 billion merger with CK Hutchison's Three UK could lead to higher prices for mobile customers and that it would explore potential solutions to its concerns before it makes a final decision about the deal in December.