ACCC raises white flag over VHA-TPG merger

The ACCC has decided not to appeal the court decision overturning its block on the merger between Vodafone Hutchison Australia (VHA) and TPG Telecom.

After examining last month’s Federal Court judgement, the regulator has determined it does not have grounds to appeal, as doing so would require the ACCC to establish an error of law by the judge.

Justice John Middleton had ruled that contrary to the ACCC’s belief, the merger between the two companies was not likely to have the effect of substantially lessening competition in the mobile market.

The ACCC had made its decision based on the fact that TPG had previously been exploring plans to establish Australia’s fourth mobile network.

But as TPG repeatedly argued, including in court, the operator had long since abandoned these plans before making the agreement with VHA, and had no plans of reviving them even if the two companies were not allowed to merge.

Middleton sided with the companies, and in his judgement had argued that it is not the ACCC’s role to engineer a competitive outcome, but merely to evaluate whether a given merger is likely to substantially lessen competition.

But in a statement, ACCC Chair Rod Sims appeared to maintain that the overall outcome of the merger on competition will be negative.

“The ACCC remains disappointed by this outcome, which has closed the door on what we consider was a once-in-a-generation chance for increased competition in the highly concentrated mobile telecommunications market,” he said.

“The future state of competition without a merger is uncertain. But we know that competition is lost when incumbents acquire innovative new competitors. Despite this outcome, we will continue to oppose mergers that we believe will substantially lessen competition, because it’s our job to protect competition to the benefit of Australian consumers.”

VHA CEO Iñaki Berroeta welcomed the ACCC’s decision, stating that the merger is expected to allow the company to quickly progress completion of the merger. The deal does still require shareholder and some more minor regulatory approvals, but Berroeta said he believes the merger should be completed in mid-2020.

“We are pleased that the ACCC has decided not to appeal the Court’s decision and that will allow us to quickly progress completion of the merger with TPG. We believe that the merger will allow us to be a stronger player that will bring more choice and value for Australian consumers and businesses,” he said.

“Ultimately, consumers and businesses will be the big winners from this merger. After 18 months of uncertainty, we’re excited to now be able to progress our plans. Finally, Australia will see a third, fully integrated telecommunications company with the scale to compete head to head across the whole telecoms market.”

Image credit: ©stock.adobe.com/au/Juan Aunión