ACCC gives up on TPG-Vodafone merger battle

ACCC said it has concluded that it does not have grounds for appeal

Australia’s competition watchdog has decided against appealing the decision by the Federal Court to allow telcos TPG Telecom and Vodafone Hutchison Australia (VHA) to go ahead with their proposed merger. 

In February, the Federal Court voted in favour of the proposed $15 billion merger between the telcos, overruling opposition from the Australian Competition and Consumer Commission (ACCC).

The telcos took the case to court last May following the ACCC's opposition of the merger on the grounds that it would hurt competition in the mobile network market.

The ACCC argued a merger would prevent TPG from resurrecting its plan to roll out Australia’s fourth mobile network, thereby becoming an “aggressive competitor” in the sector.

Now, in its own words, the ACCC is declining to appeal the Court’s decision that the proposed merger “would not substantially lessen competition”. 

The ACCC said 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,” ACCC chair Rod Sims said.

“The future state of competition without a merger is uncertain. But we know that competition is lost when incumbents acquire innovative new competitors.”

“Despite this outcome, we will continue to oppose mergers that we believe will substantially lessen competition, because it’s our job to protect competition to the benefit of Australian consumers,” he added. 

The decision comes as TPG reveals in its latest half-yearly financial report that its VHA merger plans resulted in a hit of $6 million in one-off transaction costs in the six months ending 31 January. 

The telco reported a year-on-year drop in earnings before interest, tax, depreciation, amortisation and impairment for the half year, to $406.6 million. 

However, the company’s revenue was up by 0.9 per cent, year-on-year, to nearly $1.25 billion for the period.