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2015-06-19

TPG

iiNet/TPG deal still on hold

The ACCC has delayed making a decision on the proposed takeover of iiNet by TPG until August 20, a week after the deal is supposed to be voted on by shareholders.

The competition regulator has issued a preliminary view indicating that the merger raised concerns that it wants to consider further.

"The ACCC's preliminary view is that the acquisition of iiNet may lead to a substantial lessening of competition, potentially resulting in higher prices and/or degradation of the non-price offers available in the market, including customer service," the regulator said in its report.

That however is unlikely to be the regulator’s last word on the matter.

It is becoming increasingly clear that scale will play a large role in success in the NBN world, not least because the NBN’s current pricing structure poses major challenges to small players – as the industry has been arguing for several years.

From the ACCC’s standpoint, having at least two viable competitors to Telstra is probably better than having only one, even if that does mean a reduction in the number of independent companies operating in the market.

That is why analysts expect the deal to get approval in the end.

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