ACCC: TPG-Vodafone merger made mobile market less competitive

The Australian Competition and Consumer Commission (ACCC) has found that Australians are expected to pay more for mobile phone plans after recent price increases from major telcos.

The agency said Telstra, Optus and Vodafone have all increased prices for their mobile plans over the past 12 months, and also follows the merger of TPG and Vodafone in 2020.

“The ACCC opposed the merger of TPG and Vodafone because we were concerned it would lead to higher mobile prices, and result in three similar providers with little incentive to compete strongly,” ACCC chair Rod Sims said.

“Despite evidence showing the three mobile network owners reacted strongly to the potential competitive threat of a new TPG network, the Court considered that the merger would be pro-competitive, allowing Vodafone to compete more effectively against Telstra and Optus.

“When markets end up with a smaller group of large look-alike players with stable positions, competition is muted and consumers pay more.”

The ACCC said Telstra increased its postpaid plan prices by between $5 and $15 per month, while its recharge expiry period for prepaid plans have been shortened from 35 and 42 days to just 28 days. Vodafone meanwhile increased its postpaid plans by between $5 and $40 a month and also reduced 35-day expiry prepaid plans down to 28 days.

Optus’ postpaid prices increased by $6 per month, but its prepaid plan pricing remains unchanged.

“Our analysis shows that consumers will now be left paying significantly more for a range of mobile phone plans at Telstra, Optus and Vodafone,” Sims said.

“The behaviour of the three big telcos would suggest they are not concerned about losing customers to rivals.”

The ACCC has also encouraged customers of the three telcos to consider moving to other providers where they could save between $5 and $25 per month or more for plans with comparable data inclusions.

With telcos also offsetting price increases with higher data allowances, customers were also encouraged to check how much data they typically use and choose a plan that covers only the data they need.

Citing its recent Internet Activity Report, Australians on average consume less than 15 GB of data per month, and also pointed to plans that include at least 15 GB of data can be found for as little as $25 per month, along with unlimited national calls and texts.

“We suspect many customers who have recently had their mobile provider justify a price increase with higher data usage would prefer the previously available lower monthly fee in exchange for a lower data allowance,” Sims said.

“There are still ways to find a cheaper mobile plan but, ultimately, dynamic competitive markets deliver best for consumers.”