Competition tribunal rejects Telstra-TPG regional network sharing deal

The Australian Competition Tribunal has affirmed the ACCC’s decision not to grant authorisation for the proposed regional spectrum authorisation arrangements between Telstra and TPG Telecom. Back in December 2021, the ACCC decided not to grant authorisation for the two operator’s proposed spectrum authorisation arrangements. The companies appealed that decision.

The Tribunal has now denied authorisation because it was not satisfied that the proposed arrangements were not likely to have the effect of a substantial lessening of competition or that the benefit to the public likely to result would outweigh the detriment. The Tribunal claims the proposed arrangements would give Telstra substantial benefits and increase its market strength on the retail and wholesale mobile markets, and would undermine Optus’ incentives to invest in 5G technology. Over time, the Tribunal expects this to weaken the competitive constraint on Telstra, and lead to increased prices and margins. 

Telstra and TPG said they were disappointed by the decision and would consider the ruling before taking further action. Telstra also called for a rethink of spectrum policy to help improve regional coverage and meet demand for mobile data. According to CEO Vicki Brady, “investing in more towers to add capacity in regional Australia was not always commercially viable or an efficient use of capital or government funds, especially given there was a large amount of spectrum not being used and it wouldn’t result in any material increase in coverage.”

This is the first review by the Tribunal of a merger authorisation under a new authorisation regime which came into effect in 2017. The Tribunal also says it has clarified its approach to the assessment in an authorisation context of the likely effects on competition and any benefits which are likely to result from the proposed arrangements. The Tribunal’s reasoning will assist the ACCC in considering future applications for authorisation. 

Optus applauds Tribunal’s decision 

Optus has welcomed the Tribunal’s decision to uphold the Australian Competition and Consumer Commission’s (ACCC) rejection of the proposed Telstra and TPG’s network sharing deal. 

“We are delighted that the Tribunal has upheld the ACCC’s original decision to block this anti-competitive arrangement”, said Optus CEO Kelly Bayer Rosmarin. 

Optus said it has invested AUD 43.7 billion in infrastructure and services since 1992, and this year, the operator plans to spend an additional AUD 1.6 billion.