Vocus' Nextgen buyout cleared by ACCC

The ACCC has cleared Vocus’ $861 million acquisition of Nextgen Networks but warned it will closely scrutinise any proposed future consolidation in the telecommunications sector.

The competition watchdog’s chairman Rod Sims said that the market had “expressed very little concern” over the combination of Vocus and Nextgen.

The ACCC itself found the two offered largely “complementary” services and believed competitive tension in the market would “limit any harm to competition”.

“In assessing this potential transaction, we took into account that Nextgen is the only remaining significant supplier of wholesale transmission services that isn’t vertically integrated,” Sims said in a statement.

“This possible acquisition has come under close scrutiny due to that fact, as I have said in the past that it would.

“What the ACCC really had to consider here was whether the acquisition has the potential to make it harder for smaller broadband providers to compete if they have to acquire wholesale services from competitors that are vertically integrated.”

Sims said that small players had indicated they “are not generally reliant on Nextgen to be able to compete”.

The removal of regulatory hurdles should clear the path for Vocus to complete its buyout of Nextgen’s substantial terrestrial dark fibre network and subsea cable projects.

Sims said that while the combination of Vocus and Nextgen “did not raise concerns”, the telco industry generally showed the effects of “recent consolidation and increased vertical integration”, and would therefore attract the ACCC’s close future attention.

“The four largest retail service providers – Telstra, Optus, TPG and Vocus – supply over 90 percent of broadband services in Australia,” Sims said.

“Any future potential mergers or acquisitions that increase concentration can expect to receive close examination from the ACCC.”