Australian Regulator Has Concerns On Hutchison-Vodafone Deal

Australia's antitrust regulator Wednesday outlined preliminary areas of concern surrounding Vodafone PLC's (VOD) planned local merger with Hutchison Telecommunications (Australia) Ltd. (HTA.AU), and said it was worried that the deal could hurt competition.

In a "Statement of Issues" on the planned tie-up, which was announced in February, the Australian Competition and Consumer Commission said its preliminary view "is that the proposed merger raises competition concerns in the short to medium-term" in the retail mobile telephony and broadband markets.

A Statement of Issues is not a final decision, but provides the ACCC's preliminary views, the regulator said. It also gives the parties involved a chance to resolve areas of particular concern.

Calling for submissions from the public on its views, the regulator also said the proposed merger would cut the number of mobile network operators in Australia to three from four "in a market which is already highly concentrated and that the prospect for a new entrant...of the scale and scope necessary to provide a competitive constraint on existing operators is practically nonexistent."

"The ACCC is concerned that the removal of Hutchison as a vigorous and effective competitor will lead to increased prices for customers," it said. The regulator also noted that Vodafone and Hutchison are "each other's closest competitors" focussed on metropolitan and prepaid markets.

The ACCC noted the merged group could also have an increased ability to observe its rivals' plans for network investment, given Hutchison has a network sharing agreement with Telstra Corp. (TLS) and Vodafone has an agreement with Singapore Telecommunications Ltd.'s (Z74.SG) Australian arm Optus.

Submissions from the public, and the parties involved, are due by April 17, and the ACCC said it expects to make a final decision on the planned tie-up by May 6.

-By Lyndal McFarland, Dow Jones Newswires; 61-3-9292-2093; lyndal.mcfarland@dowjones.com

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