ACCC gives nod for TPG, iiNet deal

20/08/2015 - 10:07

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The corporate watchdog has warned that a future merger between any two of the remaining fixed broadband suppliers would raise serious concerns, while also giving the go-ahead for TPG Telecom’s $1.6 billion takeover of iiNet.

ACCC gives nod for TPG, iiNet deal

The corporate watchdog has warned that a future merger between any two of the remaining fixed broadband suppliers would raise serious concerns, while also giving the go-ahead for TPG Telecom’s $1.6 billion takeover of iiNet.

Australian Competition and Consumer Commission chairman Rod Sims said while the watchdog was concerned that TPG’s proposed purchase of iiNet may lessen competition in the retail fixed broadband market, it would not reach the ‘substantial lessening’ threshold.

“However, the ACCC has noted the growing consolidation in what will now become a relatively concentrated broadband market,” Mr Sims said.

“Any future merger between two of the remaining four large suppliers of fixed broadband is likely to raise serious competition concerns.”

In making its decision, the ACCC found the combined competition from Telstra, Optus, and M2 Group would likely be enough to limit harm to competition from the merger.

The watchdog said it also concluded that the acquisition would not substantially lessen completion in the wholesale transmission services market.

“The ACCC took into account the important role of non-vertically integrated suppliers of wholesale transmission services,” it said.

“These suppliers assist in promoting a more competitive wholesale transmission market, and can also help to facilitate competition in the supply of retail broadband services.”

Mr Sims said any future acquisition that would remove an important independent supplier in the wholesale transmission market would also face close scrutiny.

In late July, iiNet shareholders overwhelmingly backed TPG’s offer of either $9.55 in cash per share, or a cash-and-scrip option that will see them receive 0.5533 new TPG shares, $3.77 in cash and a special dividend.

iiNet shares were 1.2 per cent higher to $9.54, while TPG shares rose 1.8 per cent to $9.33 at 10am.

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