The Vodafone Group plc (Vodafone) and Hutchison 3G Australia Pty Ltd (Hutchison) (operator of the ‘3’ brand) have merged to form a 50:50 joint venture called Vodafone Hutchison Australia Pty Limited (VHA). The ACCC announced in May that it would not oppose the merger.
The merger increases concentration in the mobile network operator space by moving the market from four key players to three: VHA, Telstra and Optus. However, the ACCC considered that this increased concentration would not substantially lessen competition for the following reasons:
- There was evidence suggesting that, absent the merger, the parties would be unable to engage in price competition in the long term and to compete effectively with Telstra and Optus. The ACCC found that while both Vodafone and Hutchison had been vigorous and effective competitors, absent the merger, they were likely to be a less competitive force in the retail market in the foreseeable future.
- The merger would provide the parties with the scale required to operate effectively and provide competitive high speed data services, like mobile broadband.
Vodafone and Hutchison had made commitments to the ACCC not to alter any existing mobile plans for two years once the entities merged. ACCC chairman Graeme Samuel indicated that the clearance was not based on this commitment as behavioural measures ‘are generally viewed by the Commission as an unattractive merger remedy’.
The combined entity will market its services under the Vodafone brand and gradually phase out ‘3’.