Vodafone and 3 attempt to ward off ACCC with pricing promise

Stan Beer
Monday, 25 May 2009 15:19

Opinion and Analysis

Some market watchers say that a pricing announcement today by Vodafone and Hutchison will not influence an ACCC determination about their proposed merger on May 29. However, it is hard not to view the announcement promising to maintain existing pricing for the next two years as a pretty fair attempt.

The two mobile phone carriers in February announced their intention to merge Australian operations, which would create a carrier with about 6 million subscribers. The merged entity would have the scale to rival second placed Optus which has a bit less than 8 million subscribers and Telstra which has about 9.5 million subscribers.

However, the stumbling block could be the Australian Competition and Consumer Commission which is due to make a determination on the merger this Friday 29 May.

The big issue that has been raised is whether the merger would lessen competition in the Australian mobile phone market and thus result in raised prices.

Both Vodafone and 3 (owned by Hutchison) are the two most aggressive players in the Australian market when it comes to price. Both offer attractive plans and rates in both mobile voice and data compared to their two bigger rivals and both compete vigorously against each other for a similar price conscious customer demographic.

Thus, there is a strong argument that the merger could significantly impact the budget priced mobile market in Australia.

It is in this context that the companies issued a joint announcement today with a title boldly proclaiming: "Vodafone and Hutchison committed to maintain market-leading prices"

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