ACCC approves iiNet-TPG merger

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ACCC approves iiNet-TPG merger

TPG's $1.56 billion acquisition of iiNet has cleared a critical regulatory hurdle, with the Australian Competition and Consumer Commission announcing this morning it will not stand in the way of the deal.

"While the ACCC was concerned that the acquisition of iiNet by TPG may lessen competition in the retail fixed broadband market, particularly in the short term, the ACCC concluded that this would not reach the threshold of a 'substantial' lessening of competition as required under section 50 of the Competition and Consumer Act," said ACCC chair Rod Sims.

The consumer watchdog determined after receiving public submissions that remaining competition from Optus, Telstra and the operator of Dodo and iPrimus brands, the M2 Group, would "limit the harm" in the fixed broadband market from an iiNet-TPG merger.

The ACCC also announced that "many" submissions "expressed concern" that TPG, a company known for low-cost offerings, would not maintain iiNet's "high standard of customer service". TPG has previously stated its intention to retain the iiNet brand.

Despite today's clearance for the iiNet acquisition, the ACCC warned that further consolidation in the "relatively concentrated" fixed broadband industry would be closely scrutinised.

"Any future merger between two of the remaining four large suppliers of fixed broadband is likely to raise serious competition concerns," Sims said.

The authority also ruled that the iiNet-TPG deal would not "substantially" affect the level of competition in the wholesale transmission market.

"The ACCC took into account the important role of non-vertically integrated suppliers of wholesale transmission services," read the Commission's statement. "These suppliers assist in promoting a more competitive wholesale transmission market, and can also help to facilitate competition in the supply of retail broadband services."

"Independent suppliers have the incentive to encourage entry and expansion by smaller players who, unlike Telstra, Optus, and TPG, have little or no transmission infrastructure of their own."

Shareholders approved the iiNet-TPG deal late last month. With today's ACCC ruling out of the way, approval from the Federal Court will be sought tomorrow, with 7 September the scheduled date for transfer of shares.

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