Voda-Hutch merger has ACCC up in arms

Concerns have been raised that the merger proposal between Hutchison and Vodafone Australia will remove the most aggressive competition over price and initial reservations have been tabled by the Australian telecommunications regulator.

An issues paper on the proposed merger was released recently, which called for a response from the mobile telecommunications industry to its concerns, by the Australian Competitions and Consumers Commission.

The paper says “The ACCC’s preliminary view is that the proposed merger raises competition concerns in the short to medium term.”

Although the final views of the regulator are not represented in the issues paper, the discomfort that is being caused by this merger has been clearly indicated by the ACCC.

The fact that Hutchison and Vodafone are in direct competition with each other because they both concentrate their business on “price-sensitive customers in metropolitan areas” is the regulator’s main concern.

The paper states “Hutchison has competed aggressively for market share in the national market for supply of retail mobile telecommunications services, consistently attracting a relatively high proportion of customers from the other three Mobile Network Operators. The ACCC is concerned that the removal of Hutchison as a vigorous and effective competitor will lead to increased prices for customers.”

A 95 percent share of the mobile telephony market would be controlled by a combined VHA, Telstra and Optus.

The resulting “increased concentration” of major mobile carriers and the idea that the entity’s reseller partners that were being proposed would be “unlikely to constrain the merged entity” was also a serious concern for the ACCC.

Another problem the regulator had was that price collusion or another form of anti-competitive behavior could occur with the existing network sharing and a joint venture relationship between the Telstra, the merged VHA and Optus.

The amount of combined mobile spectrum that could be held by the merged VHA was, however, something that didn’t concern the ACCC.

It said “The ACCC considers that a substantial lessening of competition is unlikely to arise in relation to the aggregation of spectrum.”

Source – ITNews.com.au