Finance Finance News Telcos Vodafone and TPG merger given go-ahead by court

Telcos Vodafone and TPG merger given go-ahead by court

TPG shareholders will receive a special dividend of 49 to 52 cents per share should they vote for a merger with Vodafone on June 24. Photo: Simon Rankin
Twitter Facebook Reddit Pinterest Email

A $15 billion merger between Vodafone Australia and TPG has been given the green light after a decision in the Federal Court.

Australia’s consumer watchdog opposed a merger between the telecommunications companies in May last year because it would discourage competition in the market.

But Federal Court Justice John Middleton said the multi-billion dollar merger would not have that effect.

“To leave Vodafone and TPG in its current state would not promote competition in the market,” he said in his judgment on Thursday.

He said the merger would allow the companies to compete with Telstra and Optus.

“It is not for the ACCC or this court to engineer a competitive outcome,” the judge said.

The ACCC issued a statement after the ruling saying it believed TPG had the ability and incentive to overcome technical and commercial challenges.

“Australian consumers have lost a once-in-a-generation opportunity for stronger competition and cheaper mobile telecommunications services with this merger now allowed to proceed,” ACCC Chair Rod Sims said.

“Mobile telecommunication services are integral to Australia’s social and economic future and Telstra, Optus and Vodafone already control almost 90 per cent of the market. There is clear evidence that consumers pay more when markets are concentrated.”

“The ACCC’s concern was that with this merger, mobile data prices will be higher than they would be otherwise. These concerns were reinforced by statements from the industry welcoming the merger and the consequent “rational” pricing.”

Mr Sims said the ACCC stood by its decision to oppose this merger.

“If the ACCC won 100 per cent of the cases we took it would be a sign we weren’t doing our job properly; by only picking ‘safe’ cases and not standing up for what we believe in.”

“The future without a merger is uncertain. But we know that competition is lost when main incumbents acquire innovative new competitors.”

The ACCC is carefully considering the judgment.

-with AAP