ACCC gives Vodafone Hutchison merger the green light - UPDATED

Stuart Corner
Friday, 29 May 2009 12:21

IT Industry - Strategy

The ACCC says it will not oppose the proposed merger of Vodafone and Hutchison's Australian mobile operations after concluding that the merger is unlikely to substantially lessen competition in the provision of mobile services.

The ACCC says it undertook an extensive investigation over three months, which included scrutiny of a substantial number of internal company documents from the merger parties and submissions from their competitors.

According to the ACCC the information showed that, absent the merger, "the parties are unlikely to sustain the significant investment in their mobile networks to provide competitive high speed data services, such as mobile broadband."

"Ongoing investments are needed to meet the increased customer demand for bandwidth-hungry data services, including mobile broadband. In this respect, the ACCC considers that mobile voice and data services will continue to converge in the future," ACCC chairman Graeme Samuel said.

Several industry analysts have suggested that the increased concentration of ownership would reduce pricing pressure for on mobile services leading to higher prices. The ACCC however concluded that "the proposed merger would not result in a substantial lessening of competition in the retail mobile telecommunications market."

Samuel said: "The pricing commitment issued on 25 May 2009 by the merger parties [in which they commited to retaining all their respective plans for two years] has not had any bearing on the ACCC's decision.'

The basis upon which the ACCC  reached its decision will be outlined in a Public Competition Assessment, to be made available on the ACCC's website, www.accc.gov.au/publiccompetitionassessments.


Welcoming the move, the new companies announced a shift in marketing strategy, to retain the 3 brand. When the merger was announced in February they said that services would be marketed under the Vodafone brand. However, in a statement issued to welcome the ACCC's decision, they said that the merged company "will continue to market products and services under the Vodafone and 3 brands and all respective network arrangements, caps and plans, retail outlets and customer service capabilities will remain unchanged for the foreseeable future.

The two companies said they expected to complete the merger within two weeks. The CEO will be Hutchison Australia CEO Nigel Dews and the chairman is expected to be Nick Read, CEO of Vodafone Asia-Pacific & Middle East Region.