The ACCC will not oppose Vocus Group Limited's proposed acquisition of TPG Telecom Limited's (ASX: TPG) fixed line business, enterprise, government, and wholesale customer base as well as its fibre and transmission networks.
Vocus supplies fibre and network services to government, enterprise and wholesale customers. It also supplies communications and technology services to small and medium sized businesses, and retail telecommunications services to consumers.
Vocus also owns a fibre network, which includes domestic inter-capital transmission and metropolitan fibre infrastructure serving business premises.
TPG is a major telecommunications company which supplies fixed broadband services to consumers, business and government customers. It also supplies wholesale telecommunication services.
The ACCC's review focused on how closely Vocus and TPG compete in the supply of data network and connectivity services, including fixed-line internet services, to large enterprise and government customers.
"Our investigation found that Vocus concentrates on supplying large enterprise and government customers, whereas TPG focuses on the small and medium enterprise segment of the market," ACCC Commissioner Dr Philip Williams said.
The ACCC notes the introduction of NBN Co's wholesale Enterprise Ethernet product in 2018 has significantly reduced barriers to entry and expansion to supplying large customers. This product has enabled providers with no or a small fibre footprint to compete for larger customers.
"After the acquisition, Vocus will continue to face strong competitors including Telstra, Optus, Aussie Broadband, Superloop and managed service providers in supplying government, large enterprise, and SME customers," Dr Williams said.
As part of the review, the ACCC also considered the impact of the acquisition in the supply of fixed line voice services, NBN wholesale aggregation services, and data centre, cloud and security services.
"Overall, we did not find that the acquisition would likely result in substantially lessening competition in any market," Dr Williams said.
More information can be found on the ACCC's website at Vocus Group Limited - TPG Telecom Limited.
Note
In considering the proposed merger, the ACCC applies the legal test set out in section 50 of the Competition and Consumer Act.
In general terms, section 50 prohibits acquisitions that would have the effect, or be likely to have the effect, of substantially lessening competition in any market.
Background
The assets that Vocus is proposing to acquire from TPG include the following:
- Network assets: TPG's fibre network, including metropolitan, domestic, inter-capital and international subsea cable systems, and data centres that are primarily used for business, enterprise, government, wholesale and SME.
- Vision Network: a wholly-owned subsidiary of TPG, Vision Network is a fixed line broadband network that provides residential broadband access services in selected areas of Sydney, Canberra, Perth, Adelaide, Brisbane, Melbourne, as well as Geelong, Ballarat and Mildura.
- Wholesale, government and enterprise products and services: TPG provides fixed line fibre and fixed line network services to wholesale, enterprise and government customers under the TPG Telecom and AAPT brands.
TPG also operates a mobile network, which includes the Vodafone brand in Australia. However, this is not part of the proposed acquisition.
TPG's consumer, business, enterprise, government, and wholesale mobile customers as well as its consumer and "small office home office" retail fixed line customers and business unit will also be excluded from the proposed acquisition.
