Vodafone and TPG's $15 billion merger given green light by Federal Court

Ruben Fields
February 15, 2020

A Federal Court judge said a tie-up between Vodafone's joint venture with local telco Hutchison Telecommunications (Australia) Ltd and TPG would not harm competition, rejecting the Australian Competition and Consumer Commission's (ACCC) reason for blocking the deal previous year.

ACCC chairman, Rod Sims, said in a statement released Thursday, that the regulator is carefully considering the ruling, suggesting it could appeal the decision.

"Mobile telecommunication services are integral to Australia's social and economic future and Telstra, Optus and Vodafone already control nearly 90 per cent of the market".

The ACCC's decision to block the merger largely hinged on its opinion that TPG would go ahead and build a fourth mobile phone network in Australia anyway if they were prevented from merging.

Vodafone's Australia boss Inaki Berroeta said today's result allowed further investment in next generation networks including 5G.

Vodafone CEO Iñaki Berroeta has welcomed the Federal Court decision.

Sims continued: "We will continue to oppose mergers that we believe will substantially reduce competition, because our job is to protect competition and, in doing so, ensure that Australian consumers enjoy the benefits of competition".

The ACCC, which has the right to lodge an appeal to the court ruling, said it was considering the judgment.

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"It is not for the ACCC or this court to engineer a competitive outcome", the judge said. In August 2018, both companies announced their intention to compete more effectively with Telstra and Optus, the two telecommunications companies that have dominated the telecommunications market so far and continue to do so.

A $15 billion merger between Vodafone Australia and TPG has been given the green light, but the consumer watchdog says it will cause mobile data prices to rise.

Justice Middleton said that in 2017 for a "moment" TPG and its founder David Teoh had once planned to roll out a network but accepted the company no longer had those plans.

Many in the industry said the merger should have never been blocked by the ACCC to begin with.

The ACCC had said a tie-up between the companies would discourage Vodafone, Australia's second-largest mobile phone company, from entering the internet market and discourage TPG from building a mobile phone network.

The company had sought to get out of the MVNO game by building its own 4G network, but said it abandoned those plans after the federal government banned the use of Huawei technology. "There is clear evidence that consumers pay more when markets are concentrated".

For the merger to be fully finalised, a number of conditions still need to be met, including: the approvals from TPG shareholders, the Federal Court and a number of other regulatory bodies.

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