Proposed merger of TPG and Vodafone is granted approval

Proposed merger of TPG and Vodafone is granted approval

The Federal Court of Australia (FCA) today granted approval for TPG and Vodafone Hutchison Australia (VHA) to proceed with their proposed merger, combining the fixed-line communications and mobile assets of the two businesses.

VHA had sought authorisation from the Court to allow the transaction to proceed following the Australian Competition and Consumer Commission’s (ACCC) rejection of the proposed merger during its informal merger clearance deliberations.

 The ACCC – both in rejecting informal merger clearance and in arguing that authorisation should not be granted – stated its belief that the proposed transaction raised competition concerns. The ACCC argued that in the absence of the merger TPG would enter the mobile market as a mobile network operator, and that the merger would therefore substantially reduce competition in the retail mobile. Prior to the merger announcement TPG had announced its intention to deploy a mobile network. However, subsequent to the merger announcement TPG announced that it would cease the network deployment, citing the Government’s prohibition on the use of Huawei equipment in 5G networks.

In handing down its judgement the FCA dismissed these concerns, finding that in the absence of the merger TPG would not be likely to deploy a mobile network: “TPG’s ship has sailed in the retail mobile market in Australia.” The full details of Judge Middleton’s decision will not be made public due to commercial sensitivities, but he has made clear that he did not find that the merger would “substantially lessen competition”.

Both Frontier Economics (Asia-Pacific) and Frontier Economics (Europe) were retained by solicitors for the merging parties – Herbert Smith Freehills and Norton Rose Fulbright– to provide expert economic and competition policy advice and modelling as input to both informal merger clearance submissions as well as its application to the FCA requesting authorisation. The collaboration across Frontier Economics combined knowledge and technical expertise on the Australian market, telecommunications and mergers appeals.

Prof. Stephen Gray appeared before the FCA as an expert witness on behalf of VHA, Frontier's (Europe) David Foster appeared before the FCA as an expert witness on behalf of TPG and Mr Warwick Davis submitted an expert report to the Court on behalf of TPG. They were supported by colleagues across offices in London, Singapore and Melbourne, with one consultant taking a secondment from London to Melbourne to work more closely with the Asia-Pacific team.

Frontier Economics regularly advises clients on a range of competition matters across the world.