ACCC probing TPG/iiNet deal over lack of competition

ACCC probing TPG/iiNet deal over lack of competition

Consumer watchdog calling for comment on whether the proposed acquisition will hurt competition in the market

The Australian Competition and Consumer Commission is investigating if TPG Telecom’s proposed acquisition of iiNet would substantially lessen competition in the market for the supply of retail fixed broadband services.

ACCC chairman, Rod Sims, said on Thursday that the acquisition would combine two of the five largest suppliers of fixed broadband in Australia.

The consumer watchdog is exploring the extent to which the acquisition of iiNet will decrease competition by reducing the likely competitive tensions around pricing, innovation and service quality.

The ACCC has released a statement of issues outlining its preliminary views on the acquisition and has invited other parties to respond by July 5.

“The ACCC has received a number of submissions from consumers,” Sims said. “Their concerns primarily focus upon fears that iiNet’s customer service levels will decline as a result of the proposed acquisition,” he said.

The ACCC is also considering whether competitive constraints posed by the remaining competitors – namely Telstra, Optus, and M2 and the much smaller market participants – would be sufficient to prevent a substantial lessening of competition in the supply of fixed broadband services.

“As a general proposition, competition is stronger when the market contains more competitors,” Sims said.

TPG announced in March that it intended to acquire iiNet for $1.4 billion. M2 made a competing bid one month later before TPG revised its acquisition offer in early May, which was supported by iiNet's board.

TPG's acquisition of iiNet, if it goes through, will boost TPG's broadband customer base to more than 1.7 million.

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