ACCC blasts less competitive mobile market after TPG-Vodafone merger

Australia's competition watchdog claims its fears of less mobile competition in the wake of the TPG-Vodafone merger have become a reality, with price hikes now seen across the board.

The Australian Competition and Consumer Commission (ACCC) tried to block the $15 billion merger because it believed maintaining four mobile operators in the market would be better for competition.

The government did not back the position, nor did the Federal Court, which overruled the ACCC and allowed the merger to proceed.

The ACCC has maintained its position since. 

Almost a year on, the ACCC has produced analysis which it says validates its stance, with postpaid plans increasing in price (albeit with higher data inclusions, in many cases) and the recharge period of prepaid plans being reduced - across the industry.

“Our analysis shows that consumers will now be left paying significantly more for a range of mobile phone plans at Telstra, Optus and Vodafone,” ACCC chair Rod Sims said.

In all instances, the ACCC said, “these mobile price increases follow the merger of TPG and Vodafone in 2020.”

“The ACCC opposed the merger of TPG and Vodafone because we were concerned it would lead to higher mobile prices, and result in three similar providers with little incentive to compete strongly,” Sims said.

“Despite evidence showing the three mobile network owners reacted strongly to the potential competitive threat of a new TPG network, the Court considered that the merger would be pro-competitive, allowing Vodafone to compete more effectively against Telstra and Optus.”

“When markets end up with a smaller group of large look-alike players with stable positions, competition is muted and consumers pay more.”

The ACCC urged mobile customers to shop around with smaller mobile virtual network operator (MVNO) brands.

It also “encouraged consumers to check how much data they typically use and choose a plan that covers only the data they need.”

“We suspect many customers who have recently had their mobile provider justify a price increase with higher data usage would prefer the previously available lower monthly fee in exchange for a lower data allowance,” Sims said.

Sims openly encouraged consumers to switch from mobile plans offered by the mobile network operators (MNOs).

“We want all mobile customers to know that switching to a new provider is a very simple process, and the new provider will move your existing number over for you,” he said.

“Before changing over, we encourage consumers to compare different providers’ geographic coverage, and consider their individual needs, as not all providers offer the same coverage.

“There are still ways to find a cheaper mobile plan but, ultimately, dynamic competitive markets deliver best for consumers.”

Comment was being sought from the three major MNOs at the time of publication.