Vodafone and TPG to take court action over ACCC opposition to merger

Decision to block merger will entrench power of Telstra and Optus, TPG argues

Vodafone Hutchison Australia (VHA) says it and TPG will launch legal action in the Federal Court over Australian Competition and Consumer Commission (ACCC) opposition to a proposed merger between the two telcos.

The ACCC today confirmed it opposed the merger. The competition regulator had been expected to reveal its verdict on the proposed merger tomorrow, but the decision was accidentally published today on the ACCC’s website. Shares in TPG and Hutchison Telecommunications Australia (HTA), a part owner of VHA, plunged sharply after the decision was released.

The ACCC said it believed that the merger would lessen competition in the mobile and fixed broadband markets. In a statement released late this afternoon the commission said that it believed that if the deal does not go ahead, TPG is likely to resume its efforts to roll out a fourth mobile network for Australia.

“VHA respects the ACCC process, but we believe the merger with TPG will bring very real benefits to consumers,” VHA’s chief executive Iñaki Berroeta said. VHA remains firmly committed to the merger, the CEO said.

“We have therefore decided that VHA should, together with TPG, pursue approval of the merger through the Federal Court,” Berroeta said.

The merger would bring together two complementary businesses that have very little overlap, VHA argues: TPG has a significant fixed broadband business, while Vodafone represents around a fifth of the Australian mobile market.

“VHA is an established mobile business with less than 1 per cent of the fixed broadband market, while TPG is the second largest fixed broadband player with no mobile network,” Berroeta said.

“While we continue to pursue the merger through the court, it remains business as usual for VHA,” the CEO said. “We will continue to challenge the market by delivering the best value products and services we can to our customers.”

“TPG remains of the firm belief that the proposed merger will result in greatly enhanced competitive dynamics in the Australian telecommunications industry, as well as superior choice and outcomes for consumers,” TPG executive chairperson David Teoh said.

“A combination of our companies would create a new, vigorous and vibrant competitive force. Left unchallenged, this decision will only serve to further entrench the enormous power of Telstra and Optus.”

“TPG considers that there is a compelling case to seek orders from the Federal Court of Australia that the proposed merger will not, and is not likely to, substantially lessen competition,” a TPG statement said.

“TPG therefore intends, together with VHA, to pursue proceedings in the Federal Court to seek appropriate orders consistent with that view at the earliest possible time.”

The merger agreement between the telcos has been extended to 31 August 2020 in order to allow sufficient time for a Federal Court verdict on the deal.

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Tags VodafoneTelecommunicationsTPGAustralian Competition and Consumer Commission (ACCC)Vodafone Hutchison Australia (VHA)

More about AustraliaAustralian Competition and Consumer CommissionFederal Court of AustraliaHutchisonOptusVHAVodafone

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