Rod Sims, Allan Fels blast TPG-Vodafone merger clearance

ACCC chair Rod Sims and one of his predecessors, Allan Fels, have attacked the decision to allow the TPG-Vodafone merger.

Rod Sims addresses the media in Sydney on Thursday Picture: AAP

Competition regulator chairman Rod Sims and one of his predecessors, Allan Fels, have attacked the Federal Court’s decision to allow the $15bn merger of TPG and Vodafone, saying it shows how much the scales are tipped towards corporate Australia and it is time for the government to send a “legislative signal”.

Mr Sims said the Australian Competition & Consumer Commission would maintain its course, challenging mergers it believed were anti-competitive and would damage the economy.

Mr Fels said the ruling would have never happened in “serious jurisdictions like the US and European Union”, despite the US Federal Court this week approving the merger of T-Mobile and Sprint.

The pair’s comments came as Communications Minister Paul Fletcher supported the Federal Court’s decision, saying it cleared “the way for a stronger third player in the mobile market — which in my view is likely to bring greater competition in the market, in turn delivering benefits to consumers”.

But Mr Sims told The Australian the court’s decision highlighted just how much corporate Australia was favoured over good consumer outcomes.

“I think we need to have a ­debate on whether we want a competitive economy or not, whether we want a world where incumbents can acquire innovative companies, or a world where challengers are allowed to take them on,” he said.

“People are starting to lose faith in the market economy and one reason for that is that we have too concentrated an economy.”

Mr Sims said the court’s ruling had effectively closed the doors on any new disruptive player entering the market. “This door is closed for the foreseeable future,” he said.

“In TPG we had a company that was a well-known brand name, it had spectrum, an extensive network and a large customer base. So if anyone was going to challenge the big three it was TPG — they desperately wanted to get into the mobile market. We were concerned about the implications of this merger on consumers and that hasn’t changed.”

Mr Sims would not be drawn on the issue of whether the regulator would appeal against the judgment, saying the regulator would read through the judgment before taking its next step.

However, he hit back at comments from judge John Middleton that the regulator’s place was not to engineer an outcome.

“We are engineering an outcome whichever way we go, whether we stop a deal or we let it through,” he said. “When you make a judgment you are inevitably influencing what the merger parties want to do.”

Mr Fels said: “On the comment that the ACCC should not engineer competitive outcomes, I would say that if it was left to the private sector to engineer, the outcome will invariably be anti-competitive. Decisions like this makes our economy very concentrated, and it may be time for parliament to send a legislative signal to the courts to get tougher on mergers.

“The ACCC opposes very few mergers and only does so when there is a strong case, so this decision is surprising. The decision underestimates the capacity of TPG and Vodafone as single entities to compete, and has been swayed too much by self interest in business evidence.”