Commpete Welcomes Australian Competition Tribunal’s Rejection Of Telstra And TPG Spectrum Sharing Deal

Commpete, Australia's leading alliance for competition in digital communications, has welcomed the Australian Competition Tribunal’s (The Tribunal) decision to uphold the Australian Competition and Consumer Commission’s (ACCC) rejection of a proposed network sharing deal between Telstra and TPG in Australia’s regional and rural areas.

The deal proposed TPG decommission 700 mobile sites and direct its services to Telstra’s network under certain commercial terms, and that Telstra gain ownership of TPG’s regional spectrum. The ACCC blocked the move in December 2022, citing the likely outcome of less competition in the mobile sector and Australian mobile users being ‘worse off over time’ in terms of price and regional coverage.

TPG and Telstra took the matter to The Tribunal, claiming the ACCC incorrectly concluded the deal should not be granted on the basis of competition and consumer outcomes. Today, the Tribunal rejected these submissions, upholding the ACCC’s original verdict.

Chair of Commpete, Michelle Lim, said The Tribunal’s decision was a decisive move for competition in the sector. “This deal would have handed a dominant provider control over mobile pricing, service availability and service standards in the middle of a cost-of-living crisis,” she said. “Now, more than ever, Australians deserve the benefits of choice and a competitive mobile sector. Likewise, smaller providers, many of whom have been championing greater competition, should be entitled to a fair go. Commpete commends this decision by The Tribunal.”

Lim said the court appeal highlights the importance of embedding future market structure, and brings into focus improvements needed in the merger review process.

“Just over a year ago, former ACCC Chairman Rod Sims proposed major reforms in Australia’s merger review regime, saying it was no longer fit for purpose, and ‘skewed towards clearance,’” she said. “More recently, current ACCC chair Gina Cass-Gottlieb called for changes to merger laws to protect competition.

“While mergers that are ‘likely’ to lessen competition are prohibited, we need to better define ‘likely’ in the legislation, making it clear the substantial lessening of competition includes “entrenching, materially increasing or materially extending a position of substantial market power”. Commpete believes this would make it much easier for regulatory bodies to uphold decisions made in the interests of competition and fairness.”

Lim concluded that the next regulatory step should be the declaration of mobile access under Part XIC of the Competition and Consumer Act (CCA) allowing the provision of fair and non-discriminatory terms to level the playing field for a wider range of industry players.

“So far, the ACCC has only declared mobile termination, which prevents a dominant operator from refusing to terminate a call from another operator. No other form of access to dominant networks has been mandated, and there is currently no incentive for mobile network operators to provide roaming or mandate wholesale access,” she said.

“This light touch approach to regulating mobile networks is perplexing. Given the continuing development of mobile technology and the increasing part it plays in all aspects of business and life, it is simply unacceptable that the owners of mobile infrastructure are completely immunised from competition.

“This process brought out 11,000 pages in public submissions showing a clear monopoly position in certain regional areas. In other markets, such as fixed line and energy, this would never be allowed without mandating the right of access to compete to other industry participants, and in turn providing consumers with the right to choose.

“Unless steps are taken to ensure appropriate wholesale access to mobile infrastructure is available, Australians will be deprived of the full benefit of technological advances in this space.”

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