ACCC casts doubts on Telstra's takeover of Adam Internet
December 21, 2012
The Australian competition watchdog says Telstra’s plan to buy local ISP Adam Internet will reduce competition in retail voice and broadband services.
Citing serious concerns about how the acquisition could affect the competitive landscape in the broadband market, the Australian Competition and Consumer Commission (ACCC) has called for further submissions from the market. The regulator was due to rule on Telstra’s takeover of Adam Internet on Thursday, but has deferred its plan to make a final decision on the acquisition until February 7.
In a statement Thursday, ACCC chairman Rod Sims said. “The ACCC’s preliminary view is that the proposed acquisition is likely to result in a substantial lessening of competition in the supply of retail fixed voice and broadband services.
“This is because Telstra would have the ability and incentive to use its market power in wholesale markets to favor the Adam Internet business over its other wholesale customers, which is likely to foreclose competition in the relevant downstream retail markets.”
The ACCC also notes that Adam Internet appears to be a strong competitor in the market for retail fixed broadband services in South Australia and is concerned that the proposed acquisition may reduce the levels of competitive tension for the supply of these services in this state.
Telstra announced its plan to buy Adam Internet in October, with plans to turn the Adelaide-based ISP into a national budget broadband company.
But the proposed acquisition drew strong opposition from rivals, such as Vodafone, iiNet, Macquarie Telecom, which on Wednesday made a last minute call to the ACCC to halt Telstra’s takeover.
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