ACCC approves TPG acquisition of iiNet

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China fans use their mobile phones as they await the start of the Asian Cup Group B soccer match between China and Saudi Arabia at the Brisbane Stadium in Brisbane January 10, 2015. Reuters/Edgar Su

The Australian Consumer and Competition Commission has announced its approval on TPG Telecom’s takeover of iiNet on Thursday. Both TPG and iiNet supply fixed broadband in Australia and the takeover deal will allow it to become the second largest Internet service provider in the country.

“While the ACCC was concerned that the acquisition of iiNet by TPG may lessen competition in the retail fixed broadband market, particularly in the short term, the ACCC concluded that this would not reach the threshold of a ‘substantial’ lessening of competition as required under section 50 of the Competition and Consumer Act,” ACCC Chairman Rod Sims said.

The ACCC has also reportedly received submissions from a large number of interested parties who expressed concerns over TPG’s handling of iiNet’s standards after the acquisition. The high standard of customer service and competitiveness have earned iiNet a good position with the consumers.

But the competition watchdog found that the other major providers of fixed broadband services like Telstra, M2 and Optus will provide enough means for TPG to maintain the standards of iiNet services in order to survive the competition. However, Sims has observed that further amalgamation between any two of the remaining 4 big telecommunication companies could result in “serious competition concerns.”

It has also been noted by the market regulator that merging of these two companies would not lead to a decrease in competition in the wholesale transmission services market.

The Australian Financial Review reported that the decision was reached after ACCC commissioners met on Tuesday over a discussion on the issue. The deal has already received an overwhelming support from the shareholders of iiNet. The ACCC approval has now made way for iiNet to lodge an application for the court to ratify the deal which will seal it. Once the deal is finalised, TPG will become the country’s second largest telecommunication company with more than 1.7 million consumers after the 3.1 million customer base of Telstra.

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