TPG supplies retail fixed broadband and voice services, and is building its own mobile network in Australia. Vodafone owns and operates its own mobile network and has started supplying fixed broadband services on the National Broadband Network (NBN). The ACCC’s 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”.
“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”, said ACCC chair Rod Sims.
“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 added. The ACCC will also closely examine the likely impact of removing Vodafone as a competitor in the fixed broadband market.
The ACCC will, in addition, consider the longer-term impact of the proposed merger, given the likelihood of increased take-up of mobile broadband services in place of fixed home broadband services in the future, especially after the roll out of 5G technology.
The ACCC invites submissions from interested parties on the Statement of Issues by 18 January 2019. The ACCC plans to release its final decision on the merger 28 March 2019.
VHA said the ACCC's decision wasn't unexpected and it will continue to work closely with the regulator with the aim of resolving its concerns. Over recent months, VHA said it "has engaged closely and transparently with the ACCC, providing a significant amount of information about the proposed merger, consumer benefits and challenges faced by providers in the telecommunications sector."
The company still expects it can complete the merger in the first half of 2019. In addition to ACCC clearance, the deal remains subject to approval in Federal Court and from TPG's shareholders.
