The ACCC has raised preliminary concerns over the proposed merger between TPG and Vodafone saying it could result in a substantial lessening of competition.

The consumer watchdog released a statement of issues earlier today.

TPG supplies retail fixed broadband and voice services and is building its own mobile network in Australia. Vodafone owns and operates its own mobile network and has started supplying fixed broadband services on the National Broadband Network (NBN).

Rod Sims, Chair at the ACCC said, “Our preliminary view is that TPG is currently on track to become the fourth mobile network operator in Australia, and as such it’s likely to be an aggressive competitor.

“We therefore have preliminary concerns that removing TPG as a new independent competitor with its own network, in what is a concentrated market for mobile services, would be likely to result in a substantial lessening of competition. If TPG remains separate from Vodafone, it appears likely to need to continue to adopt an aggressive pricing strategy, offering cheap mobile plans with large data allowances.

“Our preliminary view is the merged TPG-Vodafone would not have the incentive to operate in the same way, and competition in the market would be reduced as a result. A mobile market with three major players rather than four is likely to lead to higher prices and less innovative plans for mobile customers.”

ACCC chairman Rod Sims

The ACCC said it will also closely examine the likely impact of removing Vodafone as a competitor in the fixed broadband market.

Sims said, “Although Vodafone is currently a relatively minor player in fixed broadband, we consider it may become an increasingly effective competitor because of its high level of brand recognition and existing retail mobile customer base.”

The consumer watchdog said it will consider the longer-term impact of the proposed merger, given the likelihood of increased take-up of mobile broadband services in place of fixed home broadband services in the future, especially after the roll out of 5G technology.

“The ACCC is continuing to consider whether operators will need to offer both mobile and fixed broadband services in the longer-term to remain competitive, meaning that TPG and Vodafone will necessarily be closer competitors in the future,” Sims added.

The ACCC invites submissions from interested parties on the statement of issues by 18 January 2019.

Its final decision is scheduled for 28 March 2019.

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