ACCC OK Hutchison And Vodafone Merger

Consumer watchdog says it’s OK for mobile operators to get together

In what must be seen as a sigh of relief for the struggling 3 brand, the Australian Competition and Consumer Competition has said it is OK for its parent company, Hutchison, and Vodafone to merge their mobile operations.

In a statement on its webiste, the ACCC said it will not oppose the proposed merger of Vodafone and Hutchison’s Australian mobile operations, after concluding that it is unlikely to substantially lessen competition in the relevant markets.

The ACCC undertook an extensive investigation over three months, which included scrutiny of a number of internal company documents from the merger parties and their competitors.

The ACCC had regard to the changing nature of the mobile telecommunications industry and the increasing need for mobile network operators to have sufficient scale to be able to continue to make significant investments in their network capabilities.

In reaching its decision the ACCC considered evidence which showed that absent the merger, the parties are unlikely to sustain the investment in their mobile networks to provide competitive high-speed data services, such as mobile broadband.

 “Ongoing investments are needed to meet the increased customer demand for bandwidth-hungry data services, including mobile broadband. In this respect, the ACCC considers that mobile voice and data services will continue to converge in the future,” ACCC Chairman, Graeme Samuel said.

A key consideration in the ACCC’s investigation was whether increased concentration in the mobile sector would result in reduced pricing pressure for retail mobile telecommunications services.  It considered evidence which suggested that, individually, without this merger, the parties would not sustain vigorous price competition in the longer term, meaning that the two big players in the market – Telstra and Optus – would be left to their own devices as far as pricing structure goes.

Leave a Reply