Court clears way for $15bn telco merger

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.

The Australian Competition and Consumer Commission opposed the merger between the telecommunications companies in May last year on the grounds it would discourage competition in the market.

But Federal Court Justice John Middleton said the multibillion dollar deal would not have that effect.

“To now leave Vodafone and TPG in its current state would not promote competition in the retail mobile market,” he said in his judgment yesterday.

“A merger would not now, and would not likely in the relevant future, substantially lessen competition in the supply of retail mobile services in Australia.”

Instead he said the “rational and business-like solution” was for the companies to merge and be a “stronger competitive force” against giants Telstra and Optus.

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

Vodafone Hutchison Australia chief executive Inaki Berroeta said all telco customers would benefit.

“The consumer in Australia wins with this decision,” he said.

“We’ll have a stronger player in the market with the ability to enter quickly the 5G market.”

TPG shares shot 84¢ higher to $8.15, while Hutchison added 2.5¢ to 16.5¢.

The ACCC has argued the merger would concentrate power among Optus, Telstra and Vodafone.

However Mr Berroeta said competition was not just a matter of the number of competitors.

The ability to compete was also important, he said. Vodafone has been building a 5G network and its first sites are due to offer service later this year.

TPG executive chairman

David Teoh was similarly “very pleased” following the court’s decision.

The ACCC, however, hit out at the decision, claiming mobile data prices will rise. “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,” chairman Rod Sims said.

He added the ACCC would continue to oppose mergers that it believed would lessen competition.