Commission clears Vodafone’s purchase of TelstraClear

Commission clears Vodafone’s purchase of TelstraClear

The Commerce Commission has cleared Vodafone New Zealand’s proposed purchase of TelstraClear Limited.

In assessing the clearance application, the Commission looked at the potential impact of the purchase in a number of markets. These include the provision of fixed line calling and broadband services to residential, as well as business customers, with a particular focus on small businesses, long distance backhaul services, mobile phone services and spectrum management rights for mobile phone services.

The Commission assessed the extent to which Vodafone and TelstraClear currently compete ‘head to head’ and whether the loss of that rivalry would lead to a substantial lessening of competition, the test under the Commerce Act.

Commerce Commission chair Dr Mark Berry said, “In reaching its decision, the Commission considered that the merged entity would continue to face competition from Telecom, as well as Orcon, Slingshot and other smaller businesses in providing fixed line voice and broadband services to residential and small business customers”.

The Commission did not find any significant business overlap between Vodafone and TelstraClear in the provision of either mobile phone services or fixed line services to large businesses. Finally, Vodafone would not acquire all of the radio spectrum presently owned by TelstraClear. Some of the spectrum will be transferred to TelstraClear’s parent, Telstra Corporation, and will be available for purchase by other telecommunications companies.

As a result, the Commission is satisfied that the proposed acquisition would be unlikely to substantially lessen competition in any of the relevant markets,” said Commerce Commission Chair, Dr Mark Berry.

A public version of the full written reasons for the decision will be available as soon as practicable on the Commission‘s website at www.comcom.govt.nz/clearances-register

Background
Vodafone applied for clearance in July to acquire 100% of the shares and/or assets of TelstraClear from Telstra Corporation Limited.

Vodafone is a mobile phone operator in New Zealand and has a nationwide network servicing its mobile retail customers, as well as wholesaling mobile services to other providers. In addition, Vodafone is increasingly offering a range of fixed line services to residential and business customers and is also reselling Sky Television.

TelstraClear offers a range of predominantly fixed line services to residential and business customers throughout New Zealand. In addition to its fixed line products, TelstraClear also offers cable TV, mobile (through a wholesale agreement with Vodafone) and backhaul services.

When considering a proposed merger, the Commission must decide whether the competition that is lost in a market when two businesses merge is substantial. We will give clearance to a proposed merger only if we are satisfied that the merger is unlikely to have the effect of substantially lessening competition in a market.

Backhaul is a generic term used to describe the transport of data between regional and national data aggregation points. Backhaul generally involves carriage of signals by fibre optic cables rather than by copper cables; although it can also be provided by microwave radio.

A fact sheet explaining how the Commission assesses a merger application is available on the Commission’s website: http://www.comcom.govt.nz/merger-assessment/

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