ACCC clears TPG's iiNet takeover

TPG's proposed acquisition of iiNet moved a step closer today with the Australian Competition and Consumer Commission announcing that it will not oppose the deal.

The Commission says while it was concerned that the $1.5 billion acquisition could lessen competition in the retail fixed broadband market, particularly in the short term, it does not believe it would reach the threshold of a 'substantial' lessening of competition.

The ACCC says it received 'a large number' of submissions on the issue, with many expressing concern that TPG would not maintain iiNet's competitive offerings after the acquisition.

It says Telstra, Optus and M2, which operates brands including Dodo and iPrimus, would provide competitive constraint and likely limit harm to competition from the merger.

"This constraint would provide sufficient incentive for TPG to maintain the iiNet service if there is consumer demand for it and for other suppliers to meet that demand if they fail to do so," says the consumer watchdog.

However, Rod Simms, ACCC chairman, warned that any future merger between two of the four remaining large suppliers of fixed broadband is likely to raise 'serious' competition concerns.

The Commission also concluded that TPG's acquisition of iiNet would not substantially lessen competition in the market for wholesale transmission services.

The ACCC says it took into account the important role of non-vertically integrated suppliers of wholesale transmission services, who assist in promoting a more competitive wholesale transmission market and can help facilitate competition in the supply of retail broadband services.

"Independent suppliers have the incentive to encourage entry and expansion by smaller players, who unlike Telstra, Optus and TPG, have little or no transmission infrastructure of their own," the ACCC says.

Sounding a note of warning, Simms adds: "Any future acquisition that would remove an important independent supplier in the wholesale transmission market will therefore also face very close scrutiny.

iiNet shareholders voted 'overwhelmingly' in favour of TPG's takeover of the company last month.

iiNet will now seek orders from the Federal Court.