The competition watchdog says it won't oppose Vocus Communications’ proposed acquisition of Nextgen Networks, plus two development projects, for up to $861 million.
The competition watchdog says it won't oppose Vocus Communications’ proposed acquisition of Nextgen Networks, plus two development projects, for up to $861 million.
The Australian Competition and Consumer Commission found that services provided by the two companies were "largely complementary".
"Where there was overlap, the combined competitive constraint from other major wholesale suppliers, namely Telstra, Optus, and TPG, would likely be sufficient to limit any harm to competition," the ACCC said.
Following completion of the acquisition, Vocus, which purchased Perth-based Amcom Telecommunications in 2015 and M2 Group shortly after that, plans to expand its connection points to the National Broadband Network from 68 to 112 out of a possible 121 nationwide NBN points of interconnect (POIs).
The expansion will provide more wholesale options for smaller broadband providers at those POIs while also offering access to a broader bundle of products.
Chairman Rod Sims said in assessing the deal, the watchdog took into account that Nextgen was the only remaining significant supplier of wholesale transmission services that wasn’t vertically integrated.
This possible acquisition has come under close scrutiny due to that fact, as I have said in the past that it would,” Mr Sims said.
“What the ACCC really had to consider here was whether the acquisition has the potential to make it harder for smaller broadband providers to compete if they have to acquire wholesale services from competitors that are vertically integrated.”
Mr Sims said the market didn’t show much concern over the deal.
“There was very little concern raised by market participants. Small broadband providers say they are not generally reliant on Nextgen to be able to compete,” he said.
“In addition, excess capacity in the wholesale transmission market provides an incentive for providers of wholesale transmission to sell that capacity, even if they are vertically integrated.”
Mr Sims said while the proposed deal didn’t raise concerns, the ACCC would keep a watch on competition in the telecommunications industry.
“The four largest retail service providers - Telstra, Optus, TPG, and Vocus - supply over 90 per cent of broadband services in Australia,” Mr Sims said.
“Any future potential mergers or acquisitions that increase concentration can expect to receive close examination from the ACCC.”
