ACCC says TPG and Vodafone may be future competitors, expresses concerns with merger

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ACCC says TPG and Vodafone may be future competitors, expresses concerns with merger

The ACCC has raised concerns with the proposed merger of TPG Telecom and Vodafone over the potential impact on the mobile and broadband market as a whole.

Chairman Rod Sims said removing TPG as a new independent competitor with its own network would result in a substantial decrease in competition, and being separate from Vodafone would keep mobile plans competitively priced.

“Our preliminary view is that TPG is currently on track to become the fourth mobile network
operator in Australia, and as such it’s likely to be an aggressive competitor,” Sims said.

“The merged TPG-Vodafone would not have the incentive to operate in the same way, and competition in the market would be reduced as a result. A mobile market with three major players rather than four is likely to lead to higher prices and less innovative plans for mobile customers.”

Sims added that although Vodafone is a relatively minor player in fixed broadband, the ACCC considers it an “increasingly effective” competitor due to its brand recognition and existing retail mobile customer base.

The ACCC will consider the longer-term impact of the proposed merger as it expects an uptick in mobile broadband services amid the upcoming 5G rollout.

“The ACCC is continuing to consider whether operators will need to offer both mobile and
fixed broadband services in the longer-term to remain competitive, meaning that TPG and
Vodafone will necessarily be closer competitors in the future,” Sims said.

TPG responded saying it would continue working with the ACCC to address the matters to work towards clearing the deal.

"TPG remains confident that the necessary regulatory approvals and other conditions precedent can be completed to enable completion of the merger in the first half of 2019."

This week, TPG and Vodafone's joint venture shelled out $263 million for 131 lots in the 5G spectrum auction, second behind Telstra's 143 lots.

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