UPDATE 2: Telstra to buy OzEmail

Consumer watchdog, the Australian Competition and Consumer (ACCC), is planning to closely scrutinise Telstra's plans to acquire ISP OzEmail.

"The ACCC will consider [yesterday's] information and make further market inquiries into the possible impact of the proposal before making a decision about any intervention," acting ACCC chairman, Rod Shogren said.

"How long this will take will depend on submissions being made to the ACCC speedily and comprehensively," he said.

The ACCC is expecting other market participants to make submissions on the proposal. In addition the Australian Consumers Association has already indicated it will be making a submission.

Lin Enright, ACCC public relations director said anybody can make submissions, but the should be made as soon as possible.

According to Enright, whilst the ACCC cannot prevent the merger, if the Commission believes the acquisition "substantially lessens" competition, it can move to ask the Federal Court to stop it.

Meanwhile, telecommunications analyst, Paul Budde has claimed the merger would be disastrous for the ISP community"It cuts out the most important competitor to Telstra," Budde said.

"It really gives Telstra that monopoly and . . .that's totally undesirable."

Budde said the acquisition would be similar to the attempted takeover bid by Cable & Wireless Optus (CWO) for rival telco AAPT in April last year.

"I would definitely argue for the ACCC [to] investigate and closely look at the situation for the same sort of reasons they investigated the Optus/AAPT takeover," Budde said.

OzEmail is Australia's second largest Internet service provider, behind Telstra, with an estimated 300,000 customers.

A spokesperson for Senator Richard Alston, minister for the department of communications, information technology and the Arts said of the proposed acquisition: "All we are saying is that the Government does not interfere in the commercial operations of Telstra, but any issues regarding the substantial reduction in competition will be dealt with by the ACCC."

* For more information about the OzEmail acquisition, see Computerworld on January 24.

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