Proposed regional mobile network arrangements between Australian cellcos Telstra and TPG Telecom (trading as Vodafone Australia) will not be authorised, the Australian Competition and Consumer Commission (ACCC) has announced. In a press release regarding the development, the ACCC noted that under a statutory test it could not grant authorisation unless it was satisfied that the proposed arrangements would not be likely to substantially lessen competition, or that the likely public benefits from the arrangements would outweigh the likely public detriments. Having conducted what it called ‘an extensive public consultation and investigatory process’, the regulator has now confirmed that it is ‘not satisfied under either of these tests and therefore cannot grant authorisation’.
Commenting on the matter, ACCC Commissioner Liza Carver said: ‘We examined the proposed arrangements in considerable detail. While there are some benefits, it is our view that the proposed arrangements will likely lead to less competition in the longer term and leave Australian mobile users worse off over time, in terms of price and regional coverage.’
With the ACCC having now released its determination and an executive summary of its reasons for its ruling, it noted that its full list of reasons will be released tomorrow (22 December), following confidentiality checks with relevant parties. Among the issues mentioned in its executive summary, however, the watchdog did note that while the proposed arrangements might have led to some short-term benefits – including an improvement in TPG’s network coverage and some cost savings and efficiencies for both operators – its enduring impact would have been to ‘lessen infrastructure-based competition which would make consumers, including those in regional areas, worse off over time.’ Meanwhile, the ACCC also raised concerns that the arrangements could entrench Telstra’s dominant position in the mobile market, after considering the competitive impact of it controlling more spectrum – as per the deal, Telstra would have gained access to most of TPG’s spectrum in regional and urban fringe areas.
Notably, even Telstra and TPG’s offer of court-enforceable undertakings intended to address the ACCC’s preliminary concerns were not enough to sway it. These undertakings had proposed that the regulator could reassess the competitive effects of the proposed arrangements within eight years, and that TPG would not terminate leases or licences for 300 mobile sites in the relevant regional area. However, Ms Carver noted: ‘After careful consideration, we determined that these undertakings did not change whether the ACCC was satisfied of the relevant competition or public benefit tests against which the ACCC must assess a proposed merger authorisation … Even if the arrangements were terminated after eight years, it would be too late to unwind the negative competitive impact.’
Following confirmation of the ACCC’s decision, meanwhile, Telstra swiftly confirmed its intention to appeal the ruling. Via press release, the operator’s CEO Vicki Brady said the competition regulator’s decision was ‘extremely disappointing, particularly considering the overwhelming support the proposal received from regional customers and community groups who participated in the consultation process’.