The Federal Court has decided to allow TPG and Vodafone to merge, saying it would not substantially lessen competition.
Vodafone readied itself to take a 50.1 per cent stake in TPG in August 2018 before the Australian Competition and Consumer Commission (ACCC) blocked their proposed merger, saying it would have restricted competition.
In his ruling, Justice John Middleton disagreed with the ACCC’s argument while leveling a criticism at the watchdog’s attempt to stop the merger from going ahead, according to the Sydney Morning Herald.
“It is not for the ACCC or this court to engineer a competitive outcome,” Justice Middleton said.
“Leaving TPG and Vodafone in their current state would not create more competition in the retail mobile market.”
The ACCC was disappointed in the result, saying in a statement that TPG was already in a position to create its own mobile network and would have offered more variety in an otherwise concentrated market.
“Mobile telecommunication services are integral to Australia’s social and economic future and Telstra, Optus and Vodafone already control almost 90 per cent of the market,” ACCC Chair, Rod Sims, said.
“There is clear evidence that consumers pay more when markets are concentrated.”
“The ACCC’s concern was that with this merger, mobile data prices will be higher than they would be otherwise.”
But Justice Middleton said “TPG’s ship has sailed” when it comes to entering the mobile market – a sentiment that brought delight to CEO of Vodafone Hutchinson Australia, Iñaki Berroeta
“For the first time, Australia will have a third, fully-integrated telecommunications company,” Berroeta said.
“This will give us the scale to compete head-to-head across the whole telecoms market which will drive more competition, investment and innovation, delivering more choice and value for Australian consumers and businesses."
TPG ownership of certain parts of the 5G spectrum are a prized aspect of the merger for Berroeta.
“We have ambitious 5G rollout plans and the more quickly the merger can proceed, the faster we can deliver better competitive outcomes for Australian consumers and businesses,” he said.
The combined company is expected to be listed on the ASX as TPG Telecom Limited.
The ACCC has 28 days to appeal the Federal Court’s decision.