ACCC hurts competition by blocking Vodafone, TPG merger in Australia

 	
ACCC has restricted a A$15 billion acquisition deal between the country’s largest telecoms providers, TPG and Vodafone.


 	
Currently, Vodafone operates a mobile phone network with Hutchison Telecommunications Ltd. in Australia.

The Australian Competition and Consumer Commission (ACCC), the independent authority of the Australian government, has reportedly stopped a merger between Britain’s Vodafone Group PLC and Australia’s TPG Telecom Ltd., claiming that it would kill the potential for a fourth mobile network competitor.

According to sources close to the matter, the merger of both these firms would in fact increase competition but the pro-competitive impacts of this amalgamation is jeopardized by the ACCC’s opposition.

Reportedly, the commission’s contention is that it would be more beneficial for the consumers if TPG creates a fourth mobile network instead of joining Vodafone Hutchison Australia, however, the company claims that it has ditched all the ideas to create a new network.

Moreover, TPG had devised a plan to construct a 4G mobile network to compete with Vodafone but decided to dismiss it due to technical and economic factors, following a government ban on Huawei Technologies, the preferred vendor of the company.

Sources cite that, without Huawei’s equipment, the company could not bear to waste the shareholders’ money on a new network, especially when all the competitors are gearing up for the 5G high-speed networks, which would lead to a spike in the investment costs to deliver more data and a steep fall in the revenue per user.

According to Michael Hodge, ACCC’s lawyer, the regulator feels that TPG could compete with the nation’s largest telcos, Singapore Telecommunications’ Optus and Telstra Corp., without the help of Huawei parts. He said that the intention of snuffing out a probable new entrant in the mobile market in Australia is a major blow to competition.

Source Credit: https://in.reuters.com/article/vodafone-group-m-a-tpg-telecom/australian-watchdog-hurt-competition-by-barring-vodafone-tpg-merger-telcos-idINKCN1VV03E