"That moment has passed. To now leave TPG and Vodafone in their current state will not promote competition in the retail mobile market. A merger would not now, and would not likely in the relevant future, substantially lessen competition in the supply of retail mobile services in Australia."

Vodafone Australia chief executive Inaki Berroeta said the merger would be done two years after it was announced. Eddie Jim

The ACCC said it was considering the judgment and stood by its decision to try to block the merger.

“Australian consumers have lost a once-in-a-generation opportunity for stronger competition and cheaper mobile telecommunications services with this merger now allowed to proceed,” Mr Sims said in a statement.

Vodafone CEO 'excited'

Vodafone Hutchison Australia chief executive Inaki Berroeta will take the CEO role of the merged company, while TPG boss and founder, billionaire David Teoh, will be non-executive chairman.

Speaking to The Australian Financial Review immediately after the ruling, Mr Berroeta said he was "very pleased and very excited".

"What this means is we can go ahead with our planning with more clarity on how the future will look for the company," he said.


He said having access to TPG's extensive 5G spectrum and its fibre backhaul would be a real advantage as the merged company attempts to catch up with Optus and Telstra in construction of its own 5G network.

Mr Berroeta said he expected the merger to be completed "some time in the winter", assuming the ACCC does not appeal. That would be two years after the merger was originally announced in August 2018.

Mr Berroeta was not critical of the ACCC or Mr Sims for imposing such a long delay on the merger. "We have a lot of respect for the process. We have a lot of respect for the ACCC as an institution, and we have a lot of respect for the people in the ACCC," he said.

"All in all, for me this has been a time that has been lengthy, and we cannot forget that this court decision was taken at the same time our current vendor of 4G [Huawei] was banned from 5G. So we had a lot of things against us. It’s been quite difficult for us. But today it finishes in a great outcome," he said.

The merger will be a step back for the intensely private Mr Teoh, who has built a reputation over four decades as one of Australia's most successful entrepreneurs.

In his judgment, Justice Middleton dismissed any suggestion the evidence heard during the trial – which exposed Mr Teoh's unconventionally informal approach to doing business – had amounted to an attack on his credibility.

"Traditional good board governance would normally require careful documentation of analysis and decision making. Mr Teoh had a more informal and fluid approach, obviously with a capability to absorb and retain commercial information and make sound commercial decisions," he said.

"Whilst he may do whatever it takes to progress his business, he is obviously not foolhardy."


FIRB, US approvals required

The merger must now get the green light from the Foreign Investment Review Board and US regulators, as TPG owns submarine cable linking to US jurisdiction. If the ACCC appeals, the companies expect the process to be prolonged for at least another six months.

Like Telstra and Optus, the merged company, which will be called TPG and listed on the Australian Securities Exchange, will own both fixed line infrastructure and a network of mobile towers. It will compete in every part of the market, including residential fixed line, mobile, enterprise and NBN resale.

Outside the merger, Vodafone has mobile infrastructure but no fibre, while TPG has fixed line but no mobile, meaning the two firms are not significant competitors.

When they announced the deal 18 months ago in August 2018, TPG and Vodafone had expected this lack of competition meant ACCC would have no problem with the merger.

But at the time of the announcement TPG was in the process of building a small 4G mobile network, and had already announced some extremely competitive mobile offers.

In December 2018, the ACCC announced it was concerned that the merger would prevent TPG bringing these competitive offers to market, and said it needed more time to consider the deal.

The next month, TPG executive chairman David Teoh announced the TPG board had decided to scrap the build, saying the government's decision to ban Huawei from supplying 5G networks meant TPG had no upgrade path to 5G. TPG was building its network exclusively with cheap Huawei equipment.


TPG had expected this to end the ACCC's concerns, but in May Mr Sims announced he was blocking the merger, in a decision that took corporate Australia by surprise.

It was based on the assumption that, outside a merger, TPG was highly likely to revive its abandoned mobile network.

This assumption was painstakingly examined in the three week trial in September. In his summary, Justice Middleton was unequivocal that he did not believe there was any real chance that TPG would revive its mobile ambitions.

"I cannot conclude with absolute certainty that Mr Teoh and TPG will not change their minds, and attempt to restart entry into the retail mobile market in Australia. However, it is extremely unlikely and there is no real chance of this happening in the next five years or beyond," he said.