Premature release of Vodafone Hutchison-TPG merger decision ‘deeply embarrassing,’ Australian competition chief says

10 May 2019 10:29am

8 May 2019. By James Panichi.

A technical glitch that saw a regulatory decision on a proposed multibillion-dollar telecommunications merger published before the market had closed for the day was “deeply embarrassing,” Australia’s top competition official says.

Speaking to MLex today, Australian Competition & Consumer Commission Chairman Rod Sims said he fully understood the gravity of the premature publication of the regulator’s decision to block the proposed A$15 billion ($10 billion) merger between Vodafone Hutchison Australia and TPG Telecom.

“We have launched a full investigation into what occurred,” Sims said, adding that a first review of what had occurred pointed to technical problems with the ACCC’s website rather than human error.  

The decision to block the deal, along with a paragraph criticizing the merging parties over delays in handing over information, appeared on the ACCC’s mergers webpage at around 2pm local time before being removed. The regulator had planned to make the announcement tomorrow.

After a preliminary statement acknowledging its decision to oppose the deal, the ACCC released a comprehensive statement detailing the reasons why it had concluded that the merger would substantially harm competition in Australia’s telecommunications industry.

Sims said that, contrary to what had initially appeared on the ACCC's website, the regulator had been satisfied with the level of cooperation offered by the two companies, and that managers of the merging firms had been generous with their time. “We have no issues there,” Sims said.

As for the decision by Vodafone to appeal the decision at the Federal Court of Australia, Sims told MLex that he was “seriously relaxed” by the prospect. “That’s how the system works,” he said.

Asked whether the legal appeal posed a serious threat to the ACCC’s decision to block the merger, Sims conceded that there was a chance that the court would rule against the regulator, just as the Australian Competition Tribunal had done in 2014, when it allowed AGL Energy to acquire Macquarie Generation.

Sims said that energy consumers in eastern Australia had ended up being substantially worse off as a result of that decision by the tribunal.

“Everyone acknowledges that we were right, but we lost the court case,” Sims said. “But it’s our job to try to back up our decisions in court.”

As to TPG’s 11th-hour announcement that it would no longer proceed with its plans to roll out its own mobile network in Australia, Sims said that the decision hadn’t convinced the ACCC, and that there was no way of knowing whether TPG would stick to its decision if the merger didn't go ahead.

"I understand that the parties may well believe that they wouldn’t proceed [with the rollout] if the merger were to proceed,” Sims said, but added that companies inevitably reassessed their prospects once regulatory decisions had been made.

“We believed that they will proceed with the rollout and, if so, they will have a clever offering to consumers,” Sims said. “If the merger had proceeded, we would have had a concentrated market structure, in fixed and mobile.”

In January, TPG announced that the government’s decision to ban Chinese telecommunications equipment company Huawei from taking part in the country’s 5G rollout had forced the Australian company to back away from its plans to build up a rival mobile network.

In a conversation with MLex, Sims dismissed the companies’ claim that the creation of a large rival to take on Telstra and Singtel Optus, which dominate the Australian mobile network market, was the only way to bring competition to the industry.

Sims said the claim was similar to those of Australia’s top four banks, which claimed to compete but actually didn’t compete very much at all.

“Having different players with different needs is preferable,” Sims said.

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