Its very much official now, the AU$15 billion merger of Vodafone Hutchinson Australia (VHA) and TPG will now go ahead thanks to the ACCC ruling out appealing the high court’s decision to allow the merger to go ahead.
It’s certainly has been a long time coming, considering the merger was announced way back in August 2018 and has been the source of a very length and very public ally open battle in court between the ACCC, Vodafone and TPG. The ACCC originally blocked the merger back in May of last year on the grounds that TPG would otherwise have become the fourth major telco company in the mobile telephone marketplace.
After it announced in May last year that it would be launching and building its own mobile network, to only cancel it at the merger announcement thanks to the Federal Government’s ban on Huawei technology and its exclusion from being able to help build the 5G network in Australia and other countries.
At the time of the High Court decision, Rod Sims, ACCC chairman said that
Australian consumers have lost a once-in-a-generation opportunity for stronger competition and cheaper mobile telecommunications services with this merger now allowed to proceed. 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.
The backbone of the ACCC argument solely relied on the fact that TPG was going to become a fourth mobile network operator-owner and may have helped bring more competition to the marketplace thereby assisting to bring prices down. Ultimately, the High Court disagreed with this reasoning and allowed the merger to go ahead a few weeks ago.
Rod Sims has further said that the ACC is disappointed by the High Courts decision and that it has concluded that it does not have grounds for appeal, which would require the ACCC to establish an error of law by the judge.
The ACCC remains disappointed by this outcome, which has closed the door on what we consider was a once in a generation chance for increased competition in the highly concentrated mobile telecommunications market.
It is expected that the merger of VHA and TPG will be completed later this year and of course, we will be keeping an eye out for any further comment from TPG and VHA in relation to this news and merger as it comes to hand. Do you foresee good things for our marketplace with this upcoming merger?