The Australian Competition and Consumer Commission will not oppose Vocus Communications' $861 million acquisition of Nextgen Networks.
The consumer watchdog found that the services supplied by both companies, which includes the Australian Singapore Cable and the North West Cable System, are complementary.
Where the ACCC found to be an overlap, it considered the combined competitive constraint from other major wholesale suppliers would likely be sufficient to limit any harm to competition.
"In assessing this potential transaction, we took into account that Nextgen is the only remaining significant supplier of wholesale transmission services that isn’t vertically integrated. This possible acquisition has come under close scrutiny due to that fact, as I have said in the past that it would," ACCC chairman Rod Sims said .
Sims said that the ACCC had to consider if the acquisition could make it harder for smaller broadband providers to compete if these had to acquire services from competitors. He said the market expressed little concern over the proposed acquisition.
"There was very little concern raised by market participants. Small broadband providers say they are not generally reliant on Nextgen to be able to compete. In addition, excess capacity in the wholesale transmission market provides an incentive for providers of wholesale transmission to sell that capacity, even if they are vertically integrated," he said.
Vocus announced its plans to acquire Nextgen in June. Vocus will pay $700 million for Nextgen, $134 million for the North West Cable for and $27 million for the Australian Singapore Cable.
The acquisition remains subject to further conditions, according to Vocus.
Vocus chief executive Geoff Horth said the company would move as "quickly as possible" to close the transaction. "We will be working to ensure that we leverage the benefits of our expanded infrastructure platform and increased scale across our customer base".
Vocus owns and maintains a national fibre network of 6800km in Australia, which will expand to 17,000km with the acquisition.
Nextgen's data centre business Metronode is not part of the acquisition.
Telstra, Optus, TPG and Vocus supply more than 90 percent of broadband services in Australia. The ACCC said any future mergers or acquisitions that increased concentration could expect closer examination.