Telcos Vodafone and TPG have been given permission to merge to create a new $15 billion mobile and broadband powerhouse after the Federal Court yesterday threw out a ruling by the ACCC that the tie-up would harm consumers.
In fact, analysts said the court ruling was an embarrassing loss for the Commission.
The ACCC had argued the two companies should not be allowed to merge because it would stop any chance of TPG becoming Australia’s fourth mobile network operator – a new competitor to Telstra, Optus, and Vodafone.
But TPG has long held that it cannot afford to build a network, and no longer wants to, despite announcing plans before the merger that it planned to become a fourth player in mobile.
TPG shares ended up more than 11% yesterday at $8.15.
Justice Middleton said that in 2017 for a “moment” TPG and its founder David Teoh had once planned to roll out a network but accepted the company no longer had those plans.
“That moment has passed,” Justice Middleton said.
“To leave Vodafone and TPG in its current state would not promote competition in the market,” he said in his judgment.
Justice Middleton said he accepted that the combined Vodafone and TPG would be better able to compete with Telstra and Optus.
“It is not for the ACCC or this court to engineer a competitive outcome.”
TPG’s Mr. Teoh welcomed the judgment in a statement to the ASX yesterday after news of the judgment became public.
“TPG is very pleased with the Federal Court decision and looks forward to combining with Vodafone Hutchison Australia to create Australia’s newest fully integrated telecommunications operator,” he said.
“We will work to finalise the other conditions to the merger as soon as possible.”
ACCC chairman Rod Sims said the regulator still believed TPG could build a fourth network.
“Australian consumers have lost a once-in-a-generation opportunity for stronger competition and cheaper mobile telecommunications services with this merger now allowed to proceed,” Mr. Sims said in a separate statement.