​Vocus acquisition of M2 gets ACCC go-ahead

Proposed acquisition a merger of two complementary businesses finds competition watchdog

The Australian Competition and Consumer Commission will not oppose Vocus Communications’ (ASX: VOC) planned acquisition of M2 Group (ASX: MTU), the competition watchdog revealed today.

Vocus and M2 have limited overlaps in the supply of retail and wholesale fixed broadband services, fixed voice services, the acquisition of transmission services and the supply of data centre services, the ACCC said.

In markets where Vocus and M2 overlap, they tend to focus on different customer segments, with M2 mainly focused on residential and small business customers through its Dodo, iPrimus, Commander and Elgin brands. Meanwhile, Vocus is mainly focused on large enterprise and government customers, said the ACCC.

The ACCC found that neither Vocus nor M2 is a significant supplier of wholesale transmission services. Accordingly, the proposed acquisition will not significantly increase vertical integration between wholesale and retail telecommunications services providers, it said.

ACCC chairman Rod Sims said the acquisition was primarily a merger between two complementary businesses.

“Significantly, the merged firm will also face significant competition from Optus, Telstra and TPG. This merger consolidates the fourth player in the market,” Sims said.

In September, Vocus executives said that its planned merger with M2 would create more rather than less competition due to a strong wholesale division which helps small ISPs.

According to Vocus chairman David Spence, it is an “important enabler” of business thorough its wholesale business.

“We see that [wholesale business] as an important part of our strategy and a net positive for competition generally,” he said at the time.

Vocus managing director James Spenceley said that the merger would strengthen the combined business and creates more competition rather than less.

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