The Federal Court has thrown out the ACCC’s case against a merger between TPG and Vodafone paving the way for the two telco companies to join up in a $15 billion merger.
The Federal Court’s Justice John Middleton declared the ACCC’s arguments were not strong enough to stop the two companies from linking up, as first reported by Sydney Morning Herald.
In his decision, he determined that TPG, which ditched plans for its aspirations to become a mobile network operator in 2017, was not able to compete with the likes of Telstra and Optus and that joining up with Vodafone would put both companies in a better position to.
“To leave Vodafone and TPG in its current state would not promote competition in the market,” Justice Middleton said.
“It is not for the ACCC or this court to engineer a competitive outcome.”
The ACCC now has four weeks to lodge an appeal against the court’s decision and has said in a press release it’s carefully considering the court’s judgment.
“Mobile telecommunication services are integral to Australia’s social and economic future and Telstra, Optus and Vodafone already control almost 90 per cent of the market. There is clear evidence that consumers pay more when markets are concentrated,” ACCC Chair Rod Sims said.
“The ACCC’s concern was that with this merger, mobile data prices will be higher than they would be otherwise. These concerns were reinforced by statements from the industry welcoming the merger and the consequent ‘rational’ pricing.”
Vodafone’s CEO IÃ±aki Berroeta on the other hand has said the ruling was a “great outcome for the Australian economy.”
“For the first time, Australia will have a third, fully-integrated telecommunications company,” Berroeta said in a press release.
“This will give us the scale to compete head-to-head across the whole telecoms market which will drive more competition, investment and innovation, delivering more choice and value for Australian consumers and businesses.”
Echoing Vodafone’s sentiments, TPG’s executive chairman, David Teoh, said he was pleased with the results and would look to merge the companies as soon as possible.
“TPG is very pleased with the Federal Court decision and looks forward to combining with VHA to create Australia’s newest fully integrated telecommunications operator. We will work to finalise the other conditions to the merger as soon as possible,” Teoh said in a media release.
In May 2019, the ACCC announced it was taking legal action to block the merge between Vodafone Hutchison Australia (VHA) and TPG.
At the time, the ACCC’s Sims said it would be better for the companies to enter the mobile network and broadband sectors as separate entities in the interest of maintaining competition.
“Broadband services are of critical importance to Australian consumers and businesses, across both fixed and mobile channels,” Sims said in a press statement.
“Given the longer term industry trends, TPG has a commercial imperative to roll out its own mobile network giving it the flexibility to deliver both fixed and mobile services at competitive prices. It has previously stated this and invested accordingly.
“Vodafone has likewise felt the need to enter the market for fixed broadband services. These moves by TPG and Vodafone are likely to improve competition and future market contestability.”
More to come.
The ACCC has announced its appealing the courts decision to drop its allegations against TPG. The consumer authority argues the telco made false and misleading claims about its pre-paid internet, home telephone and mobile plans resulting in TPG retaining millions of dollars from customers.Read more