On 8 May 2019, after more than seven months of review, the ACCC announced its opposition to the $15 billion proposed merger between Vodafone Hutchinson Australia Pty Ltd and TPG Telecom Limited. The ACCC found that Vodafone is a strong competitor in the mobile services market and TPG is a strong competitor in the fixed broadband market. Critically, the ACCC’s decision is based on its conclusions that TPG would be likely to build its own 4G network in the absence of merging with Vodafone.
The perceived loss of the potential fourth 4G network in Australia seems to underlie the ACCC’s decision that the merger would be likely, in the future, to have the effect of substantially lessening competition in a market in Australia. However, TPG has stated that building its own mobile network is no longer a viable option. Despite TPG’s evidence, the ACCC seems to believe that TPG is likely the last strong potential competitor for the mobile services market.
The ACCC mistakenly announced its decision one day early, unaccompanied by any reasons. This caused TPG’s share price to fall by 13.5 per cent, reducing the market value of the company by approximately $1 billion. The Chairman of the ACCC called the mistaken announcement “highly unfortunate” and has said a thorough review will be conducted of how it occurred.
The ACCC’s decision will be challenged by TPG and Vodafone in the Federal Court of Australia. If the process is expedited, the Court may be able to hand down its judgement in about nine months. We’ll keep you updated.