In the latest rollercoaster ride, Australia's €15bn TPG-Vodafone merger, the Federal Court of Australia today cleared the two telecommunications companies to merge. The merger rumors were first confirmed in August 2018, with the two companies announcing their intention to compete more effectively with Telstra and Optus, the two telecom operators that have so far dominated the telecom market and continue to do so. Nearly a year later, ACCC blocked the merger, saying the market was already too concentrated for mobile and broadband services and that it would prefer TPG to enter the mobile market. as its own entity to improve competition. TPG and Vodafone sued ACCC in court, claiming that their merger would not significantly reduce competition, and now the companies have ruled the hearing in their favor.
Against the competition?
The ACCC stands by its initial assessment of the merger, with Chairman Rod Sims stating that "Australian consumers have missed a unique opportunity to improve competition and provide cheaper mobile telecommunications services, this merger hereby authorized." Currently almost 90% of the mobile market is occupied by Telstra, Optus and Vodafone, and similarly in the broadband sphere with Telstra, Optus and TPG. Sims continued: "We will continue to oppose mergers, which we believe will significantly reduce competition, as it is our job to protect competition and, in doing so, ensure that Australian consumers reap the benefits of competition."
Effects on consumers.
At this point, it is not clear what direct impact this merger will have on consumers, but if the ACCC is to be believed, a more concentrated market would result in higher costs for consumers. Mobile and broadband plans. Naturally, Vodafone and TPG argue that the opposite is true, with the former company declaring that the merger will allow for more investment in new technologies such as 5G. "For the first time, Australia will have a fully integrated third-party telecommunications company," said Chairman and CEO Iñaki Berroeta. "This will give us the scale we need to compete directly in the broader telecommunications market, which will stimulate competition, investment and innovation, providing more choice and value for Australian consumers and businesses." The merger is on track to be completed by mid-2020, unless further calls are made by the ACCC.