TPG-Vodafone Merger – ACCC Makes Right Call Says Commpete

Commpete has welcomed the ACCC’s decision to oppose/inquire further into the merger of Vodafone and TPG, stating the proposed deal risked serious harm to mobile consumers and competition.

The ACCC’s decision is in line with those of regulators around the world, which have either rejected or placed very strict conditions on (proposed) mergers that would reduce the number of mobile network owners in their national markets 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.

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.

Where other regulators have allowed four to three mergers to occur, they have required the merged entity to make available network capacity to stimulate wholesale markets, and this is something the ACCC will be investigating further.

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.

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