Thursday, 13 December 2018 09:52

ACCC raises concerns over proposed Vodafone-TPG merger Featured

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ACCC raises concerns over proposed Vodafone-TPG merger Pixabay

The Australian Competition and Consumer Commissions says that removing TPG, which it viewed as being on the way to becoming a fourth mobile competitor in Australia, from the fray through its merger with Vodafone would substantially lessen competition in the sector.

In a statement issued on Thursday, the ACCC said that a mobile market with three major competitors was likely to have less competition than one with four.

The watchdog said it would also scrutinise the impact of removing Vodafone as a competitor in the fixed broadband market.

Vodafone Hutchison Australia and TPG Telecom announced a merger of equals on 30 August, with the scrip deal creating a company with an enterprise value of about $15 billion.

“Our preliminary view is that TPG is currently on track to become the fourth mobile network operator in Australia, and as such it’s likely to be an aggressive competitor,” ACCC chair Rod Sims said.

“We therefore have preliminary concerns that removing TPG as a new independent competitor with its own network, in what is a concentrated market for mobile services, would be likely to result in a substantial lessening of competition.

"If TPG remains separate from Vodafone, it appears likely to need to continue to adopt an aggressive pricing strategy, offering cheap mobile plans with large data allowances.”

“Our preliminary view is the merged TPG-Vodafone would not have the incentive to operate in the same way, and competition in the market would be reduced as a result.

"A mobile market with three major players rather than four is likely to lead to higher prices and less innovative plans for mobile customers."

Sims said although Vodafone was a relatively minor player in fixed broadband at the moment, the ACCC considered it may become an increasingly effective competitor because of its high level of brand recognition and existing retail mobile customer base.

The ACCC said it would also look at the longer-term impact of the proposed merger, given that there was likely to be increased take-up of mobile broadband services rather than fixed home broadband services in future, especially after 5G was rolled out.

“The ACCC is continuing to consider whether operators will need to offer both mobile and fixed broadband services in the longer-term to remain competitive, meaning that TPG and Vodafone will necessarily be closer competitors in the future,” Sims said.

The watchdog has published a statement of issues and has invited submissions until 18 January 2019. A final decision on the proposed merger will be announced on 28 March 2019.

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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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