ACCC says ‘I told you so’ over TPG-Vodafone merger

ACCC says ‘I told you so’ over TPG-Vodafone merger

Mobile prices from all three major telcos rise over last 12 months.

ACCC chairperson Rod Sims

ACCC chairperson Rod Sims

Credit: ACCC

Australia’s competition body has wagged its finger at the country's biggest telcos after mobile plan prices soar, year-on-year, following the Vodafone and TPG merger.

The Australian Competition and Consumer Commission (ACCC) said that all three of the nation’s biggest telcos — Telstra, Optus and Vodafone — have effectively raised post-paid and pre-paid mobile plans since July last year.  

The ACCC had vehemently warned against the merger, claiming it would damage competition in Australia’s mobile phone market as Telstra, Optus and Vodafone — now part of TPG Telecom — collectively hold 87 per cent of the total retail mobile phone market and have more than 95 per cent of the post-paid market. 

According to the ACCC, Telstra increased its post-paid mobile plan prices by between $5 and $15 per month in the last year. 

It also reduced the recharge expiry on 35 and 42 day pre-paid plans to 28 days, which effectively means a price increase of between 25 per cent and 50 per cent over a year. 

Meanwhile, Optus raised the price of all its post-paid plans by $6 per month, which is an increase of between 8 per cent and 15 per cent, the ACCC claimed, although pre-paid plans were unchanged.  

In addition, Vodafone raised post-paid plans by between $5 and $40 a month, although the increases are currently accompanied by heavy discounting and temporary bonus inclusions. 

In December 2020, Vodafone’s pre-paid plans that previously featured a 35-day expiry were reduced to a 28-day expiry for the same monthly cost. Over a year, this effectively equates to a 25 per cent increase, the watchdog claimed. 

“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,” ACCC chairman Rod 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.” 

The Federal Court approved the $15 billion merger between TPG Telecom and what was then Vodafone Hutchison Australia (VHA) last March, overruling opposition from the competition watchdog. 

Following this, the ACCC described the merger as a “lost once-in-a-generation opportunity for stronger competition”. However, it also subsequently gave up the fight, saying it did not have enough grounds for appeal. 

In a statement to ARN, a Vodafone spokeswoman denied the telco had increased pricing since the merger. 

"The ACCC’s claims are misleading and its methodology is overly simplistic," she said. "Vodafone customers are paying up to 50 per cent less than what the ACCC has quoted and plans include up to 350GB more data.

"The ACCC ignores the different needs of customers (high data vs low data needs) and the fact our brands are catering for the full spectrum with aggressive pricing. The suggestion that a commercial business doesn’t compete hard for customers is out of touch."

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Tags AustraliaVodafoneTelstraoptusacccTPG

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