Internet provider TPG's takeover of rival iiNet has passed its final major hurdle, with the competition regulator indicating it will not oppose the $1.56 billion deal.

However, the Australian Competition and Consumer Commission (ACCC) ruling also suggests that there is unlikely to be any further consolidation among the country's major internet players.

iiNet shareholders last month overwhelmingly approved the buyout, which will create Australia's second-largest internet provider.

The ACCC had previously delayed making a decision as it considered a large number of public submissions, but today confirmed it will not seek to scupper the deal.

"While the ACCC was concerned that the acquisition of iiNet by TPG may lessen competition in the retail fixed broadband market, particularly in the short term, the ACCC concluded that this would not reach the threshold of a 'substantial' lessening of competition," said ACCC chairman Rod Sims.

That is the benchmark the ACCC would have to reach under the Competition and Consumer Act if it were to mount a successful challenge.

The regulator found the other major internet providers - Telstra, Optus and M2 (which owns brands including Dodo and iPrimus) - still provided enough competition to limit the harm of the TPG-iiNet merger.

"However, the ACCC has noted the growing consolidation in what will now become a relatively concentrated broadband market," said Mr Sims.

"Any future merger between two of the remaining four large suppliers of fixed broadband is likely to raise serious competition concerns."

Mr Sims said consumers accounted for many of the public submissions on the deal, raising concerns about its potential to impact on iiNet's competitive influence and high standard of customer service.

TPG shares were 1.6 per cent higher and iiNet stocks had gained 1.3 per cent at 11:00am (AEST), after the ASX was advised of the ruling.