Blocked merger ‘hurt’ Vodafone

THE ACCC has been accused of hurting rather than helping competition by blocking the $15 billion merger between Vodafone Australia and TPG.

The Australian Competition and Consumer Commission in May opposed a tie-up between TPG Telecom and the local joint venture of Britain’s Vodafone Group on grounds that it would discourage both from competing in each other’s markets.

Vodafone mainly runs a mobile phone business in a joint venture with ASX-listed Hutchison Telecommunications, while TPG has a lowcost internet business.

“The notion that TPG would, if the merger’s blocked, roll out a mobile network is just not of the real commercial world,” said Vodafone lawyer Peter Brereton in his opening statement at a Federal Court hearing.

Brereton said it would be “commercially crazy” for TPG to build its own mobile network to rival Vodafone’s, and “that, in particular, is where the ACCC’s case descends into speculation and possibilities.”

The deal would actually encourage competition but “the pro-competitive effects of this merger are imperilled by the ACCC’s opposition to it”, he said.

TPG abandoned building its mobile telephone network, which relied on equipment from Huawei, blaming a ban on the Chinese firm in Australia on security grounds.

But the move was widely seen as an attempt to ease through the merger and the ACCC said TPG may revisit a plan crucial to rivalry in the industry.

Shares in TPG had slipped by 0.3 per cent to $6.75 by 12.34pm yesterday, and were down by nearly 20 per cent from a price of $8.19 shortly after the failed merger was announced a year ago.

Hutchison shares slipped 4.17 per cent to 11.5 cents, having been 14 cents the same time last year.