The Court overturned a decision of the ACCC to block the merger, saying it would not substantially lessen competition.
Background: Australian operators Vodafone and TPG announced their intention to merge in August 2018. Both operators acquired spectrum in the 3.6GHz auction of December 2018, through a joint venture which would go ahead regardless of the outcome of the merger. TPG had previously obtained 700MHz spectrum and was rolling out its own mobile network; however, it stopped doing so in January 2019 referring to the impact of the Australian Government’s 5G security guidance, which banned the use of Huawei equipment in the country as of August 2018. In May 2019, the competition authority, the ACCC, blocked the merger saying it would substantially lessen competition, noting that both fixed and mobile markets in the country are strongly concentrated and that Vodafone and TPG are respectively entering the fixed and mobile markets.
The Federal Court overturns the verdict: On 13 February 2020, the Australian Federal Court overturned the ACCC’s decision. The Court saw no evidence of a substantial reduction in competition if the merger were to go ahead, and noted there was no credible hope of TPG rolling out its own network to become the country's fourth MNO. The conclusion is that “It is the rational and businesslike solution for TPG and Vodafone to merge and be a stronger competitive force against Optus and Telstra,” and that “It is not for the ACCC or this court to engineer a competitive outcome”.
The ACCC is disappointed: In a statement following the Court’s decision, the ACCC disagreed with the verdict as TPG had already spent AUD1.26bn on the spectrum needed to build a mobile network, has an extensive transmission network as well as a large customer base, and well-established brands. “Australian consumers have lost a once-in-a-generation opportunity for stronger competition and cheaper mobile telecommunications services,” ACCC Chair Rod Sims said. The ACCC is now “carefully considering” the decision, which means it could appeal against it.
