The TPG and Vodafone Hutchinson deal will finally go ahead after the federal court ruled a merger between the two companies will not substantially lessen competition.
ACCC opposed the merger last year as it considered that TPG was likely to continue to roll out its own mobile network and become an innovative and disruptive competitor in Australia’s concentrated mobile telecommunications market.
TPG had already spent $1.26 billion on the spectrum needed to build a mobile network, has an extensive transmission network, as well as a large customer base, and well-established brands in TPG, iiNet and Internode.
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In May last year, the ACCC blocked the two companies from merging on the grounds it would substantially lessen competition and would preclude TPG entering as the fourth mobile network operator in Australia.
Vodafone and TPG then went to the federal court to seek declaratory relief.
Justice Middleton declared today there was no real chance that a fourth mobile network built by TPG would succeed commercially, ZDNet reported.
The ACCC believes TPG has the ability and incentive to overcome technical and commercial challenges.
Rod Sims, chair of the ACCC who is disappointed in the results said, “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.
“Mobile telecommunication services are integral to Australia’s social and economic future and Telstra, Optus and Vodafone already control almost 90 per cent of the market. There is clear evidence that consumers pay more when markets are concentrated.”
Sims said the consumer watchdog’s concern was that with this merger, mobile data prices will be higher than they would be otherwise, “these concerns were reinforced by statements from the industry welcoming the merger and the consequent ‘rational’ pricing.”
The ACCC is successful in more than 80 per cent of the consumer and competition law cases it brings. It opposes mergers in a range of markets every year, with very few such decisions challenged in court.
Sims said, “We will continue to oppose mergers that we believe will substantially lessen competition because it’s our job to protect competition and, in doing so, ensure that Australian consumers enjoy the benefits of competition.”
The ACCC said it is carefully considering the judgment.