Shareholders approve Vodafone/H3G joint venture, but ACCC raises concerns

2 Apr 2009

Australian IT is reporting that the Australian Competition and Consumer Commission (ACCC) has raised concerns over the planned joint venture between Vodafone Australia and Hutchison 3G Australia (H3G). The regulator has suggested that the tie-up could lead to increased tariffs, after its initial investigation into the proposed merger suggested that competition in the wireless sector in the short and medium term could be effected. The ACCC in a statement noted it was ‘concerned that the removal of Hutchison as a vigorous and effective competitor will lead to increased prices for customers in the retail mobile telephony and mobile broadband services segments in the retail mobile telecommunications services market.’ Additionally, the regulator has claimed that existing network sharing agreements between Vodafone and Optus, and H3G and incumbent Telstra, could lead to anti-competitive coordination should plans for the joint venture move forward.

The ACCC has called for feedback on the proposals from all operators to assist its investigation, and a final ruling is expected on 6 May. For the merger to proceed it now needs only the approval of the ACCC, after H3G shareholders today gave their go-ahead to the plans. Subject to regulatory approval the merger is expected to be completed by the middle of 2009, with each company taking a 50% stake in the joint venture.