Australian authority opposes merger on both mobile and broadband grounds
The Australian Competition & Consumer Commission (ACCC) has decided to oppose the proposed merger between TPG Telecom and Vodafone Hutchison Australia (VHA). The ACCC has concluded that it is likely to substantially lessen competition in the supply of mobile services because the merger would preclude TPG entering as the fourth mobile network operator in Australia. The agency says Australia already has a very concentrated mobile services market, with the three network operators, Telstra, Optus and Vodafone, having more than 87% of the market. Similarly, the fixed broadband market is concentrated, with Telstra, TPG and Optus having about 85%. “Broadband services are of critical importance to Australian consumers and businesses, across both fixed and mobile channels,” ACCC Chair Rod Sims said. “Given the longer term industry trends, TPG has a commercial imperative to roll out its own mobile network giving it the flexibility to deliver both fixed and mobile services at competitive prices. It has previously stated this and invested accordingly. Vodafone has likewise felt the need to enter the market for fixed broadband services. These moves by TPG and Vodafone are likely to improve competition and future market contestability… 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,” Sims said. “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.” VHA has though announced that it and TPG intend to launch legal action against the ACCC’s decision. Iñaki Berroeta, VHA CEO, says the company remains firmly committed to the merger. “VHA respects the ACCC process, but we believe the merger with TPG will bring very real benefits to consumers.” He said the proposed merger is about combining two complementary businesses, which have very little overlap and can deliver more for Australian consumers together than they can alone. “VHA is an established mobile business with less than 1% of the fixed broadband market, while TPG is the second largest fixed broadband player with no mobile network,” he said. “Australia’s mobile market has delivered some of the best outcomes for consumers of any country in the OECD. The merger provides a unique opportunity for VHA and TPG to combine their complementary assets [and] would create an entity that can compete more aggressively in this highly competitive market than either VHA or TPG could on their own. It is disappointing that the ACCC does not see it this way.” Read more from the ACCA and VHA.
- Wednesday, 15 May 2019