Finance Consumer Vodafone-TPG merger could cause ‘lessening of competition’, ACCC warns

Vodafone-TPG merger could cause ‘lessening of competition’, ACCC warns

The ACCC has warned a Vodafone - TPG merger could mean higher prices for consumers. Photo: Simon Rankin
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The ACCC is worried the proposed merger between telecommunication giants TPG and Vodafone might mean bigger bills and less innovative phone plans for consumers.

The two telcos confirmed in August they planned to merge to form a $15 billion company to take on Telstra and Optus.

However, the Australian Competition and Consumer Commission flagged concerns on Thursday that the proposal could hit consumers’ hip pockets.

In its statement of issues (a document outlining concerns but not a final decision), the consumer watchdog said the two businesses’ similar operations made it likely they would become competitors in coming years.

“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,” ACCC chairman Rod Sims said.

“We, therefore, have preliminary concerns that removing TPG as a new independent competitor with its own network, in what is a concentrated market for mobile services, would be likely to result in a substantial lessening of competition.”

TPG ‘remains confident’

Despite the ACCC’s concerns, TPG told investors it still believes the merger will go ahead.

“TPG remains confident that the necessary regulatory approvals and other conditions precedent can be completed to enable the completion of the merger in the first half of 2019,” TPG said in a statement to the ASX.

It noted that a statement of issues was an important part of the ACCC’s investigative process but did “not constitute a final decision” – that is not expected until March 28 2019.

Stocks fall

Markets were swift to punish Vodafone and TPG in the wake of the ACCC announcement.

TPG shares were down almost 15 per cent by midday (ADST), and Vodafone’s price had fallen more than 20 per cent by the same time.

Shares in both companies rose immediately following the merger announcement in August, with TPG gaining 23.21 per cent from August 21-23.

Hutchison Telecommunications Australia (which runs Vodafone in a joint venture) rocketed more than 215 per cent in the same period.