Telstra's (ASX: TLS.AX) move to purchase Adam Internet has hit a snag as the Australian Competition and Consumer Commission (ACCC) wants more time to examine various competition issues.
The ACCC's action comes amidst an outcry by a number of Telstra's competitors who argue the regulator should block the deal because it will give the incumbent an advantage over other players.
Although the regulator had been expected to make a decision on the matter today, it decided to release a "Statement of Issues" on the proposed transaction, which outlines its opinion and seeks information about the potential competition that could arise if the deal was approved.
"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," ACCC Chairman Rod Sims said, in a prepared statement. "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 regulator said that Telstra did not talk about the potential advantage Telstra would have in the wholesale market in the Structural Separation Undertaking (SSU) and the Migration Plan and "would not apply in an effective or appropriate way to Adam Internet."
Under the terms of the proposed acquisition agreement, Telstra would purchase all of Adam's business including the CLEC's Adelaide data center and fiber network assets and run it as a separate subsidiary.
Competitive carriers and industry groups are invited have until Jan. 25 to respond to the ACCC's Statement of Issues. The regulator now said it will make its final decision on Feb. 7.
- see the release
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