ACCC cites Vodafone and TPG merger for increasing mobile phone plan costs

Competition watchdog argues that three look-alike players have resulted in consumers paying more.
Written by Chris Duckett, Contributor
Image: Getty Images

The Australian Competition and Consumer Commission (ACCC) said on Monday that the big three mobile operators -- Telstra, Optus, and Vodafone -- have jacked up postpaid mobile phone plan pricing and increased prices on prepaid customers by reducing expiry periods.

The ACCC said Telstra has increased its postpaid prices by AU$5 to AU$15 a month, Optus has raised prices by AU$6, and Vodafone has spiked its prices by AU$5 and AU$40 coupled with "heavy discounting and temporary bonus inclusions".

For prepaid plans, the watchdog said Telstra has reduced 35 and 42-day plans down to 28 days, which was effectively a 25% to 50% increase, Optus kept its prepaid plans stable, while Vodafone increased its prepaid plans by 25% by reducing its 35-day recharge down to 28 days.

ACCC chair Rod Sims took the opportunity to take a swing at the Federal Court decision to approve the TPG-Vodafone merger in February 2020.

"The ACCC opposed the merger of TPG and Vodafone because we were concerned it would lead to higher mobile prices, and result in three similar providers with little incentive to compete strongly," Sims said.

"Despite evidence showing the three mobile network owners reacted strongly to the potential competitive threat of a new TPG network, the court considered that the merger would be pro-competitive, allowing Vodafone to compete more effectively against Telstra and Optus.

"When markets end up with a smaller group of large look-alike players with stable positions, competition is muted and consumers pay more."

Consumers could save up to AU$25 a month if they switched to other providers with similar data inclusion, the ACCC said.

"We suspect many customers who have recently had their mobile provider justify a price increase with higher data usage would prefer the previously available lower monthly fee in exchange for a lower data allowance," Sims said.

"Before changing over, we encourage consumers to compare different providers' geographic coverage, and consider their individual needs, as not all providers offer the same coverage."

TPG hit back against the claims from the ACCC, with a spokesperson saying they were "simplistic and misleading".

"The ACCC's conclusions even contradict its own Communications Market Report which found prices paid by customers are down 16.7 per cent in 2020 compared to 2019," the spokesperson said.

"The ACCC is out of touch to suggest that mobile providers, as commercial businesses, are not competing hard for customers every day. The bottom line is, we are offering better value and a better network experience because we're able to compete harder for customers after the merger."

The company added the prices cited by the ACCC were not the ones paid by customers due to "rolling promotions", and that customers were paying 50% less.
Updated at 3:26pm AEST, 21 June 2021: Added TPG comment.

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