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.
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.