The Federal Court has declared a proposed merger between TPG Telecom and Vodafone Hutchison Australia would not substantially lessen competition, despite the oposition of the Australian Competition and Consumer Commission (ACCC).
The ACCC opposed the merger last year because it considered that, in the absence of the merger, TPG was likely to continue to roll out its own mobile network and become an innovative and disruptive competitor in Australia’s concentrated mobile telecommunications market.
The ruling revives a plan to challenge the dominance of Telstra Corp Ltd and Singapore Telecommunications’s Optus in the Australian market by giving TPG, an internet company, and Vodafone, a mobile phone company, access to each other’s sizeable nationwide networks.
The regulator has a month to lodge an appeal.
TPG Executive Chairman, David Teoh, said: “TPG is very pleased with the Federal Court decision and looks forward to combining with VHA to create Australia’s newest fully integrated telecommunications operator. We will work to finalise the other conditions to the merger as soon as possible.”
Vodafone Hutchison Australia (VHA) welcomeed the Court’s decision.
VHA Chief Executive Officer Iñaki Berroeta said it was a great outcome for the Australian economy as it would allow for greater investment in next generation networks including 5G.
“It’s been 18 months since we commenced the approval process for this merger and we’re very keen to move forward and deliver these benefits as soon as possible,” he said.
“We have ambitious 5G rollout plans and the more quickly the merger can proceed, the faster we can deliver better competitive outcomes for Australian consumers and businesses.”
He said the spectrum holdings of the merged company would increase Vodafone’s network capacity and scope for further investment.
Mr Berroeta said the merger should be completed in mid-2020, subject to the remaining regulatory/shareholder approvals, and any appeal by the ACCC.
“Australian consumers have lost a once-in-a-generation opportunity for stronger competition and cheaper mobile telecommunications services with this merger now allowed to proceed,” ACCC Chair Rod Sims said.
“Mobile telecommunication services are integral to Australia’s social and economic future and Telstra, Optus and Vodafone already control almost 90 per cent of the market. There is clear evidence that consumers pay more when markets are concentrated.”
“The ACCC’s concern was that with this merger, mobile data prices will be higher than they would be otherwise. These concerns were reinforced by statements from the industry welcoming the merger and the consequent “rational” pricing.”
The ACCC added it was "carefully considering the judgment."