ACCC Clears The Way For TPG Acquisition Of iiNet
In clearing the way for the acquisition, the ACCC noted it had some concerns over the lessening of competition, however had determined any impact would not be substantial enough to warrant its opposition.
“While the ACCC was concerned that the acquisition of iiNet by TPG may lessen competition in the retail fixed broadband market, particularly in the short term, the ACCC concluded that this would not reach the threshold of a ‘substantial’ lessening of competition as required under section 50 of the Competition and Consumer Act,” ACCC chairman Rod Sims commented.
The ACCC had received a large amount of submissions on the acquisition, with many parties having expressed concern that TPG will not maintain iiNet’s competitive offers post-acquisition.
While TPG and iiNet are two of the five largest suppliers of fixed broadband in Australia, the ACCC found that the combined competitive constraint from the other major retail fixed broadband suppliers – Telstra, Optus and M2 – would likely be sufficient to limit the harm to competition.
“However, the ACCC has noted the growing consolidation in what will now become a relatively concentrated broadband market,” Sims stated.
“Any future merger between two of the remaining four large suppliers of fixed broadband is likely to raise serious competition concerns.”
iiNet shareholders had voted in favour of the acquisition at the end of July, with iiNet to now go to the Federal Court of Australia for approval – under the proposed timescale for its implementation, iiNet will cease trading on the ASX from next Monday, with new TPG shares to start trading from Tuesday.