TPG and Vodafone Hutchinson will pursue legal action against the ACCC’s decision to block their proposed merger.

The consumer watchdog opposed the merger earlier this week saying it would reduce competition in the market.

The two companies will be be seeking declaratory relief from the federal court which has jurisdiction to decide if the merger should be permitted on the basis that it will not substantially lessen competition.

David Teoh, executive chairman, TPG said, “While we respect the ACCC’s process, it’s decision has significant implications for Australian consumers, and in our view, must be challenged.

“TPG remains of the firm belief that the proposed merger will result in greatly enhanced competitive dynamics in the Australian telecommunications industry, as well as superior choice and outcomes for consumers.

“A combination of our companies would create a new, vigorous and vibrant competitive force. Left unchallenged, this decision will only serve to further entrench the enormous power of Telstra and Optus.

“With the advent of 5G next generation mobile technology, Australian consumers more than ever need a strong challenger.”

Vodafone said it will continue to focus on its business to bring value to the company.

The companies have agreed to extend the end date for the implementation of the scheme to August 31, 2020 and is hopeful that all necessary steps to implement the scheme will be achieved by then.

Rod Sims chairman of the ACCC said, “TPG is the best prospect Australia has for a new mobile network operator to enter the market, and this is likely the last chance we have for stronger competition in the supply of mobile services.

“Wherever possible, market structures should be settled by the competitive process, not by a merger which results in a market structure that would be subject to little challenge in the future. This is particularly the case in concentrated sectors, such as mobile services in Australia.”

The consumer watchdog raised concerns about the $15 billion deal late last year arguing it could reduce the amount of competition in the industry.

If the deal went through, Vodafone shareholders would own 50.1 per cent of the company with TPG owning 49.9 per cent.

The newly merged entity would’ve been named TPG Telecom.

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