BREAKING NEWS: ACCC Won’t Appeal TPG Merger, Shares Surge
The ACCC has announced it will not appeal the Federal Court’s recent decision to grant the proposed $15 billion merger between TPG and Vodafone.
The Federal Court ruled that the merger would not substantially lessen competition and now the ACCC has conceded it does not have the grounds to appeal, which would require the regulator to establish an error of rule by the judge.
‘The ACCC remains disappointed by this outcome, which has closed the door on what we consider was a once in a generation chance for increased competition in the highly concentrated mobile telecommunications market,’ ACCC Chair Rod Sims said.
‘The future state of competition without a merger is uncertain. But we know that competition is lost when incumbents acquire innovative new competitors.’
Sims also said that despite the court’s ruling, the regulator will continue to oppose mergers they believe to harm competition.
‘… we will continue to oppose mergers that we believe will substantially lessen competition, because it’s our job to protect competition to the benefit of Australian consumers,’ Sims said.
The ACCC had announced its decision to oppose the proposed merger between the two telcos in May last year. On the 24 May, Vodafone initiated proceedings in the Federal Court, which was heard over three weeks from 10 September 2019, by Justice John Middleton.
On 13 February this year, the Federal Court ruled in favour of the merger on the grounds it did not lessen competition.
‘The court has come to the view that the proposed merger would not have the effect, or be likely to have the effect of substantially reducing competition … the merger can proceed,’ Justice Middleton said.
In 254 pages of Justice Middleton’s ruling, he found there was no credible hope of TPG providing their own network and therefore, become Australia’s fourth mobile network.
‘It is the rational and businesslike solution for TPG and Vodafone to merge and be a stronger competitive force against Optus and Telstra.
‘It is not for the ACCC or this court to engineer a competitive outcome.’
Shortly after the announcement, TPG shares surged.
After closing on AUD 7.53, TPG’s shares now sit at 8.10 following the announcement this morning – an increase of 7.44 per cent. TPG’s share price reached its highest value point at 11.10am this morning, when it hit 8.34.