Voda/Hutch merger rattles ACCC

Voda/Hutch merger rattles ACCC

Summary: Australia's competition watchdog tonight issued a strongly worded statement of concern that the proposed merger of mobile carriers Hutchison and Vodafone could lead to increased retail prices on mobile telephony and broadband services.

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Australia's competition watchdog tonight issued a strongly worded statement of concern that the proposed merger of mobile carriers Hutchison and Vodafone could lead to increased retail prices on mobile telephony and broadband services.

The ACCC's preliminary view is that the proposed merger may increase the potential for Vodafone to exercise unilateral market power

ACCC statement

In February the pair announced plans to merge in a joint venture dubbed VHA that would have around 6 million customers and combined revenues of approximately $4 billion for the 12 months ended 30 June 2008. The merger is subject to a shareholder vote and is the subject of a current ACCC inquiry.

"The ACCC is concerned that the removal of Hutchison as a vigorous and effective competitor will lead to increased prices for customers in the retail mobile telephony and [mobile broadband] services segments in the retail mobile telecommunications services markets," the regulator said in a statement tonight.

"The ACCC's preliminary view is that the proposed merger may increase the potential for Vodafone to exercise unilateral market power," it added, noting its belief that Hutchison and Vodafone were each other's closest competitors, focusing on price-sensitive customers in metropolitan areas.

Furthermore, the regulator noted it was concerned that the possibility for new entrants into the mobile market to provide a competitive constraint on the proposed three players, VHA, Telstra and Optus was "practically non-existant".

Another concern was that VHA would have an increased ability to observe plans by Telstra and Optus to invest in their networks courtesy of it being party to network sharing arrangements with both Telstra (through the Telstra/Hutchison joint 3G network) and Optus (through the Vodafone/Optus joint 3G network).

The ACCC said it would take submissions from the telecommunications industry on the merger until 17 April and would announce its own final view on the situation by 6 May.

Topics: Broadband, Government, Government AU, Mobility, Telcos, Optus, Telstra, NBN

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7 comments
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  • Restriction of competition.

    Considering the fact that the Australian Government, by its banning of Telstra from the NBN RFP, a technicality which could have been easily corrected, why is the ACCC not persuing the Government for restricting of competition in the bidding phase of the process?
    anonymous
  • Pffft

    Telstra were not restricted or barred from the bidding phase of the NBN. They merely failed to meet the minimum requirements for the application submission - something that the other vendors had no problem with.
    anonymous
  • 'Processed' response, off-topic.

    Sydney, once again, your response has nothing to do with the topic at hand.

    Good work at 'spinning' it in where you see fit, however.
    anonymous
  • Pros/Cons

    Companies will benefit from reduced costs and joint networks.

    But comes at a price: jobs cuts in Australia (hundreds of job losses), vendor expense cuts (again likely to bring down businesses in Australia - indirect job cuts), and finally less competition in the market leading to higher prices for Australian customers.

    ACCC should not agree blindly and should impose some transition conditions. That's what a government is for.
    anonymous
  • restriction??

    The Govt didn't ban Telstra, Telstra did not respond to the RFP.

    If Telstra wanted to be involved, they should have responded to the RFP. Stop the whinging!
    anonymous
  • Not concerned

    "Another concern was that VHA would have an increased ability to observe plans by Telstra and Optus to invest in their networks...."

    This is a concern? Call me nieve if you will, but I see consumers having the best of both worlds as a positive. Oh hang on, this is the Australian Telecoms industry isn't it.
    anonymous
  • There is no restriction on competition Sydney.

    "Considering the fact that the Australian Government, by its banning of Telstra from the NBN RFP, a technicality which could have been easily corrected..."

    Easily corrected by Telstra not being so arrogant with their bid in the first place. If you ask for 6 of something and get told that you can only have 5 don't you get annoyed Sydney?

    It is bad enough that only 98% of the population is entitled to this crap offered by Labor to begin with. I think everyone is entitled to a phone and fast Internet and there is no excuse, NO EXCUSE, for us not going ahead and giving it to everyone.

    Put the shareholder second and the customer first for once.
    anonymous