The ACCC will not oppose TPG’s plan to buy iiNet, allowing two of the five broadband providers in Australia to become one.

But the regulator is unlikely to let any other such merger go ahead.

The ACCC was concerned that the acquisition of iiNet by TPG would lessen competition in the retail fixed broadband market.

The watchdog concluded that competition would be reduced to a degree, but that it would not reach the threshold of a ‘substantial’ lessening of competition.

The ACCC received a large number of submissions from interested parties, including consumers, regarding iiNet’s competitive influence and long record of high level customer service.

Many expressed concern that TPG would not maintain iiNet’s competitive offerings after the acquisition.

On that matter, the ACCC found that the combined competitive constraint from the other major retail fixed broadband suppliers, Telstra, Optus, and M2 (which operates brands including Dodo and iPrimus) would be likely sufficient to limit the harm to competition from this merger. This constraint would provide sufficient incentive for TPG to maintain the iiNet service if there is consumer demand for it and for other suppliers to meet that demand if they fail to do so.

“However, the ACCC has noted the growing consolidation in what will now become a relatively concentrated broadband market. Any future merger between two of the remaining four large suppliers of fixed broadband is likely to raise serious competition concerns,” Mr Sims said.

The ACCC also concluded that the acquisition of iiNet by TPG will not substantially lessen competition in the market for wholesale transmission services.

An important part of the watchdog’s considerations was the role of independent suppliers of wholesale transmission services, which the ACCC says “assist in promoting a more competitive wholesale transmission market”, because they “have the incentive to encourage entry and expansion by smaller players who, unlike Telstra, Optus, and TPG, have little or no transmission infrastructure of their own”.

Mr Sims said it was unlikely that any future deal which would damage this important element of the industry would be allowed.

“Any future acquisition that would remove an important independent supplier in the wholesale transmission market will therefore also face very close scrutiny,” Mr Sims said.