Published: Sat, February 15, 2020
Electronics | By Kelly Massey

Federal Court Overrules ACCC Clearing Vodafone-TPG Merger

Federal Court Overrules ACCC Clearing Vodafone-TPG Merger

Following a Federal Court decision yesterday to allow a merger between Vodafone Hutchison Australia and TPG Telecom, Vodafone CEO Iñaki Berroeta said in a statement that the merger "will give us the scale to compete head-to-head across the whole telecoms market which will drive more competition, investment and innovation, delivering more choice and value for Australian consumers and businesses".

Fresh after losing its Federal Court battle to prevent the merger, the competition watchdog has claimed the decision will now mean higher mobile network prices and the continued telco triopoly of Telstra, Optus and Vodafone.

Currently Telstra, Optus and Vodafone hold more than 87 per cent of the mobile service network and the ACCC past year noted TPG had already invested $1.26 billion to build a mobile network and had an established customer base, extensive transmission network and established brands, which also include iiNet and Internode.

It later emerged in court that the network was so prized by TPG's reclusive billionaire boss David Teoh that the company made last minute adjustments to financials in order to secure funding.

Justice Middleton further added that it was not the ACCC's responsibility to 'engineer competition, ' and that 'leaving TPG and Vodafone in their current state would not create more competition in the market'.

The ACCC had said a tie-up between the companies would discourage Vodafone, Australia's second-largest mobile phone company, from entering the internet market and discourage TPG from building a mobile phone network.

ACCC opposed the merger past year as it considered that 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.

Telco titans Vodafone and TPG have been given permission to merge after the Federal Court threw out a ruling by the ACCC.

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The ACCC have said they are considering the judgement.

TPG has previously moved to build a mobile network but dumped the venture after the government banned Huawei from supplying equipment in 5G networks.

The networks operated by the three telcos also support mobile virtual network operators (MVNOs), such as TPG.

Hutchison shares surged 25%, while TPG shares gained 15%.

Responding to the ruling, ACCC Chairman Rod Sims said Telstra, Optus and Vodafone controlled nearly 90 per cent of Australia's mobile telecommunications market.

Sims said, "We will continue to oppose mergers that we believe will substantially lessen competition because it's our job to protect competition and, in doing so, ensure that Australian consumers enjoy the benefits of competition".

ACCC chairman, Rod Sims, said in a statement released Thursday, that the regulator is carefully considering the ruling, suggesting it could appeal the decision.

The merger is on its way to completion in mid-2020, unless the ACCC makes further appeals.

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