The Australian Competition Tribunal has affirmed the ACCC’s decision not to grant authorisation for the proposed regional spectrum authorisation arrangements between Telstra Corporation Limited (ASX:TLS and ASX:TL1) and TPG Telecom Limited (ASX:TPG).
The ACCC had decided not to grant authorisation for the proposed spectrum authorisation arrangements on 21 December 2022.
The Tribunal 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 noted that 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, this would weaken the competitive constraint on Telstra, and lead to increased prices and margins.
The Tribunal found that “the Spectrum Authorisation Agreement provides Telstra with substantial commercial and competitive benefits and would further increase Telstra’s position of market strength in mobile telecommunications markets, ”
“This is the first review by the Tribunal of a merger authorisation under a new authorisation regime which came into effect in 2017,” ACCC Commissioner Liza Carver said.
“The Tribunal 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.”
On 23 December 2022, Telstra and TPG applied to the Tribunal for review of the ACCC’s decision under section 101 of the Competition and Consumer Act. In such a review, the Tribunal may affirm, vary or set aside the ACCC’s determination. The role of the ACCC in the review is to assist the Tribunal.
In conducting a review, the Tribunal applies the same ‘authorisation test’ as the ACCC, and is generally limited to the information which was before the ACCC.
The Tribunal must not grant authorisation unless it is satisfied, in all the circumstances, that either the conduct would not have the effect or be likely to have the effect of substantially lessening competition or that the conduct would result or be likely to result in a benefit to the public, and the benefit would outweigh the detriment to the public that would result or be likely to result.
Authorisation provides statutory protection from court action for conduct that might otherwise be in breach of the competition provisions of the Competition and Consumer Act, including section 50 which prohibits mergers which are likely to substantially lessen competition.