Telstra has been dealt a double-blow as the competition watchdog raised concerns about its acquisition of Adam Internet and opposed its sale of Trading Post to a competitor.
The telco unveiled its plans to buy Adam Internet for about $55 million in late October and Telstra’s competitors immediately opposed the deal.
Chairman of the Australian Consumer and Competition Commission (ACCC) Rod Sims said he was particularly concerned about the prospect of Telstra favouring its own subsidiary in accessing its network.
‘‘The ability to favour other players [Adam Internet] by giving them better terms of access to their infrastructure is the issue that concerns us,’’ Mr Sims said.
‘‘That is the issue if not addressed would make it very difficult to let it go through.’’
He said Telstra may need to amend its structural separation undertaking in order to rescue the deal from near certain rejection.
‘‘One sensible option is to look at adjusting the structural separation undertaking.’’
Mr Sims said Telstra needed to offer a ‘‘fairly strong remedy’’ to address the ACCC’s concerns. Under the existing undertaking, Telstra is forbidden from giving its own retail division cheaper wholesale access to consumers' phone lines than Telstra's competitors can get. However, the rules did not consider what would happen with a wholly-owned subsidiary.
In a joint statement on Wednesday, Vodafone, Macquarie Telecom and iiNet said the Adam internet acquisition would be harmful to competition and should not be allowed.
‘‘Telstra’s proposed acquisition of Adam Internet represents a clear and substantial lessening of competition in two markets – the retail market for broadband services and the wholesale market for transmission or backhaul services,’’ says the statement.
In a separate decision, the competition watchdog also rejected Telstra’s bid to sell Trading Post, an online general merchandise and car classified advertising site, to Carsales.com.
“The ACCC concluded that the proposed acquisition is likely to result in a substantial lessening of competition through the removal of a close and effective competitor of Carsales,” ACCC Chairman Rod Sims said in a statement.