UPDATE: ACCC Responds To TPG-Vodafone Merger After Court Ruling
A $15 billion merger between Australia’s third and fourth largest telecommunications companies, Vodafone and TPG, will move ahead after the telcos beat the competition watchdog in federal court yesterday.
The Australian Competition and Consumer Commission (ACCC) opposed the merger last May, arguing it didn’t pass the legal test of not ‘substantially lessening competition’ in the already small telecommunications market, leaving consumers with fewer purchasing options.
But Vodafone appealed the decision in federal court on Thursday, with Justice John Middleton ruling the merger would go ahead because it would 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,’ he said, according to ABC News.
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,’ Justice Middleton said.
‘It is not for the ACCC or this court to engineer a competitive outcome.’
ACCC chairman, Rod Sims, said in a statement released Thursday, that the regulator is carefully considering the ruling, suggesting it could appeal the decision.
Sims said he stands by the ACCC’s belief that TPG has the ability to become a fourth mobile network provider in Australia and overcome commercial and technical challenges in doing so.
‘Australian consumers have lost a once-in-a-generation opportunity for stronger competition and cheaper mobile telecommunications services with this merger now allowed to proceed,’ Sims said.
He said mobile telecommunication providers were integral to the country’s economic and social future, with Telstra, Optus and Vodafone already controlling up to 90 per cent of the market.
‘There is clear evidence that consumers pay more when markets are concentrated,’ he said.
‘The ACCC’s concern was that with this merger, mobile data prices will be higher than they would be otherwise.’
These concerns, Sims said, were reinforced by the industry welcoming the merger and the consequent ‘rational’ pricing.
Vodafone CEO Iñaki Berroeta defended the merger and said it would give consumers stronger 5G network providers with greater competition.
‘We have ambitious 5G rollout plans and the more quickly the merger can proceed, the faster we can deliver better competitive outcomes for Australian consumers and businesses,’ Berroeta said.
‘This will give us the scale to compete head-to-head across the whole telecoms market which will drive more competition, investment and innovation, delivering more choice and value for Australian consumers and businesses.’