Vodafone Hutchison Australia (VHA) initiated proceedings in the Federal Court seeking approval of its proposed merger with TPG Telecom, following through on a promise to take legal action after the Australian Competition and Consumer Commission (ACCC) blocked the tie-up.

In a stock exchange filing, VHA said: “We believe the merger will create an entity that can compete more aggressively in the mobile market and will increase our ability to invest in networks, new technologies, and competitive plans and products for Australian consumers.”

TPG Telecom confirmed the legal action against ACCC in a separate statement, stating the merger would “not have the effect, or likely effect, of substantially lessening competition”.

It added the two operators are working together to progress the proceedings and it supports the case filed by VHA.

Less competition
In early May, ACCC announced it opposed the merger on the grounds it would likely substantially lessen competition in mobile services. ACCC chair Rod Sims said at the time TPG Teleom is the best prospect Australia had for a new mobile network operator to enter the market and “this is likely the last chance we have for stronger competition in the supply of mobile services”.

In a recent speech, Sims defended the decision, saying overseas examples have demonstrated that markets with four competitors often result in better outcomes for consumers.

“We see this currently playing out overseas in markets as diverse as Canada and France. Indeed, recently the Canadian Competition Bureau has said that mobile wireless pricing is much lower in regions where there are four players; prices are high and stable where there are three players.”

The operators announced their plan to merge in late August 2018, but required the approval of the ACCC and Australia’s Foreign Investment Review Board.

GSMA Intelligence shows VHA held a 19 per cent share of Australia’s connections (excluding cellular IoT) at end-March, behind Telstra (50 per cent) and Optus (31 per cent).