The Australian Competition & Consumer Commission raised preliminary competition concerns about the proposed merger of carriers TPG Telecom Ltd. and Vodafone Group PLC unit Vodafone Hutchison Australia Pty. Ltd.
The regulator said that TPG, being on course to become the fourth mobile network operator in Australia, has potential to give rise to aggressive competition, and removing the company as an independent competitor may lead to significant lessening of competition.
"If TPG remains separate from Vodafone, it appears likely to need to continue to adopt an aggressive pricing strategy, offering cheap mobile plans with large data allowances," ACCC Chairman Rod Sims said.
Sims said the merged entity will have no onus to operate in a similar manner, and a market with three telecom players instead of four can lead to steep prices and less innovative plans for subscribers.
ACCC said it will examine the impact of removing Vodafone as a competitor in the fixed broadband market. The long-term effect of the union will also be assessed with an increased subscription to mobile broadband services expected over fixed home broadband services in the 5G era.
A final decision on the matter will be taken by ACCC on March 28, 2019.
The proposed merged entity, to be called TPG Telecom Ltd., will have an enterprise value of around A$15 billion, combined revenues worth A$6 billion, and will be listed on the Australian Securities Exchange, the companies announced in August.