Friday, 14 December 2018 09:00

Comms group welcomes ACCC scrutiny of proposed VHA-TPG deal Featured

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Comms group welcomes ACCC scrutiny of proposed VHA-TPG deal Pixabay

Communications alliance Commpete has claimed the proposed merger between Vodafone Hutchison Australia and TPG Telecom is a threat to competition between companies offering mobile services and welcomed the move by the Australian Competition and Consumer Commission to scrutinise the deal.

Commpete, which was formerly known as the Competitive Carriers Coalition and has as its members amaysim, InABox, Macquarie Telecom, MNF Group, MyRepublic, Southern Phones, TasmaNet and Vocus, said in a statement that mobile consumers would be affected if the deal went ahead.

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

The ACCC said on Thursday that removing TPG from becoming a fourth mobile competitor was likely to lessen competition in the sector. It said it would also scrutinise the impact of removing Vodafone as a competitor in the fixed broadband market.

Commpete said the ACCC's decision was similar to that of regulators around the world who had either turned down or else placed strict conditions on mergers that would result in a reduction of the number mobile network owners in a national market from four to three.

"An extensive review of 'four to three' mobile mergers in three European markets by BEREC, the overarching communications regulatory in Europe, showed prices had risen in all markets. This occurred despite the strict conditions regulating those deals," Commpete said.

"Regulators have found there is a qualitative decline in the level of competition when a fourth operator leaves a market due to a merger. It is clear the level of competition in Australia fell away after the ACCC allowed Vodafone and Hutchison to merge in 2004.

"By contrast, the entry of TPG into mobile services, backed by its investment in building its own network, has already pushed prices down dramatically. The ACCC has learned the lesson from its decision to allow the Vodafone-Hutchison merger, and heeded international evidence in requiring more time to consider the present proposed deal."

The group said in cases where other regulators had permitted allowed similar mergers, they had required the merged entity to make available network capacity to stimulate wholesale markets.

"This is something the ACCC will be investigating further," Commpete said. "Australia’s wholesale market needs to be put on a sustainable footing under arrangements that encourage genuine price and service differentiation if consumers are going to benefit from effective competition, especially as 5G services are rolled out in the next few years."

The ACCC 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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