The Australian Competition and Consumer Commission (ACCC) today announced it would oppose the proposed merger of VHA and TPG.
The ACCC cited Australia’s concentrated mobile and fixed services markets in its media release, but particular emphasised the potential lessening of competition in retail mobile markets as being of concern.
Critically, the ACCC found that TPG has the capability and commercial incentive to resolve the technical and commercial challenges it is facing, including the Federal Government’s ban on the use of Huawei equipment for 5G networks. It cites TPG’s mobile spectrum, an extensive fibre transmission network which is essential for a mobile network, a large customer base and well-established telecommunications brands as reasons why there was a “real chance” TPG would enter as the fourth mobile network operator in Australia.
The merger parties have a number of options if they wish to proceed with the merger, including:
- seeking authorisation from the ACCC (if the parties consider that the public benefits from the merger might outweigh any detriments from the loss of competition),
- seeking a declaration from the Federal Court that the merger is not likely to give rise a substantial lessening of competition, or
- proceeding with the merger, in which case the ACCC could either apply for an injunction to restrain the acquisition prior to completion and/or apply for penalties for a contravention of s. 50.
As a result of 2017 reforms, the parties no longer have the option of directly seeking authorisation of the merger through the Australian Competition Tribunal.
The parties have advised that they will seek a declaration from the Federal Court that the merger should be permitted on the basis it will not substantially lessen competition.
Frontier Economics has been advising the merging parties.
