ACCC raises concerns over Vodafone-TPG deal

13 Dec 2018

Having taken an initial look at the proposed merger between domestic telcos Vodafone Australia and TPG Telecom, the Australian Competition and Consumer Commission (ACCC) has expressed preliminary competition concerns over its potential impact on both the mobile and broadband markets. In summary, the ACCC has published its statement of issues which sets outs its concerns and specifically highlighted the possible impact of the deal on TPG’s activities in the mobile arena and Vodafone’s efforts in the fixed broadband market.

With TPG currently building out its own mobile infrastructure, ACCC chairman Rod Sims noted: ‘Our preliminary view is that TPG is currently on track to become the fourth mobile network operator in Australia, and as such it’s likely to be an aggressive competitor … We therefore have preliminary concerns that removing TPG as a new independent competitor with its own network, in what is a concentrated market for mobile services, would be likely to result in a substantial lessening of competition.’ According to the ACCC’s initial assessment, should TPG remain separate from Vodafone it would likely need to adopt an aggressive pricing strategy for its mobile services, whereas if the tie-up moves ahead it would not have ‘the incentive to operate in the same way’, with competition in the mobile market reduced as a result. Meanwhile, the watchdog has said it plans to closely examine the impact of removing Vodafone as a competitor in the fixed broadband market, with Mr Sims noting: ‘Although Vodafone is currently a relatively minor player in fixed broadband, we consider it may become an increasingly effective competitor because of its high level of brand recognition and existing retail mobile customer base.’

The ACCC now plans to consider the longer-term impact of the proposed merger – given the likelihood of increased take-up of mobile broadband services in place of fixed home broadband services in the future – and as such, it has invited submissions from interested parties on its statement of issues. With a deadline of 18 January 2019 set for feedback, the regulator expects to issue a final decision regarding the proposed merger on 28 March 2019.