ACCC delays approval of Telstra’s Adam Internet purchase, calls for comment

20 Dec 2012

Hot on the heels of calls for it to block the proposed acquisition of South Australian broadband provider Adam Internet by fixed line incumbent Telstra, the Australian Competition and Consumer Commission (ACCC) has postponed a decision on the deal. With Telstra’s rivals having called for the watchdog to reject the proposed purchase on the grounds it would reduce competition in the budget broadband market, the regulator had been expected to make a decision on the matter today. However, it has instead released a ‘Statement of Issues’ on the proposed transaction, which sets out its initial opinion on the deal, while also seeking further information regarding the matter of competition.

‘The ACCC’s preliminary view is that the proposed acquisition is likely to result in a substantial lessening of competition in the supply of retail fixed voice and broadband services,’ ACCC chairman Rod Sims noted, adding: ‘This is because Telstra would have the ability and incentive to use its market power in wholesale markets to favour the Adam Internet business over its other wholesale customers which is likely to foreclose competition in the relevant downstream retail markets.’ Further, the regulator has said that such concerns are not addressed by Telstra’s Structural Separation Undertaking (SSU) and the Migration Plan, claiming that the measures contained in those documents ‘would not apply in an effective or appropriate way to Adam Internet’. As a final note, the ACCC has also said that it is concerned, given the status of Adam Internet as a strong presence in the retail broadband market in South Australia, that the acquisition could ‘reduce the levels of competitive tension for the supply of these services in this state’.

Submissions from interested parties in response to the Statement of Issues will be accepted by the ACCC until 24 January 2013, with the regulator subsequently expected to make a final decision on the deal on 7 February 2013.

Australia, Adam Internet, Australian Competition and Consumer Commission (ACCC), Telstra (incl. Belong)