Vocus Communications Ltd - proposed acquisition of Nextgen Group Pty Ltd
Type of assessment
Informal Review
Reference
60345
Acquirer(s)
Vocus Communications Ltd
Target(s)
Nextgen Group Pty Ltd
Industry
telecommunications
Summary
Vocus Communications Limited (Vocus) proposes to acquire Nextgen Group Pty Ltd and two development projects; the Australian Singapore Cable and the North West Cable System (together Nextgen). Nextgen's data centre business, Metronode, is not part of the transaction.
Outcome of assessment
Not opposed
Total review days *
44
Commenced public review
25th July 2016
Date completed
22nd September 2016
Market definition
The ACCC considered the effects of the proposed acquisition in the context of separate national markets for the supply of:
- wholesale transmission services;
- network services;
- retail fixed broadband services; and
- wholesale fixed broadband services.
Competition analysis
The ACCC concluded that the proposed acquisition would be unlikely to result in a substantial lessening of competition in any relevant market.
Vocus and Nextgen operate largely complementary businesses. Vocus historically has focused on supplying communication services to small-to-medium sized enterprises in metropolitan areas. Following its acquisition of the M2 Group in February 2016, it is also a significant supplier of residential broadband services through brands such as Primus and Dodo. In contrast, Nextgen's business is primarily focused on supplying inter-city wholesale transmission services.
The proposed acquisition results in some horizontal aggregation in relation to the supply of transmission services; network services; sub-sea transmission cables and broadband. However, the ACCC concluded that given the limited overlap, and the fact that Vocus and Nextgen do not compete closely in the areas in which they do overlap, it is unlikely that the proposed acquisition will substantially lessen competition in relation to the supply of any of these services.
The proposed acquisition also increases the level of vertical integration in the industry. It removes a significant non-vertically integrated supplier of wholesale transmission services. The ACCC concluded this increased vertical integration was unlikely to substantially lessen competition taking into account Nextgen's product offerings, the presence of excess capacity in the wholesale transmission market and the competitive constraints imposed by other wholesale suppliers.
Review timeline
Date
Event
25th July 2016
ACCC commenced review under the Merger Process Guidelines.
12th August 2016
Closing date for submissions from interested parties. ACCC assessing information provided during market inquiries and consulting with merger parties on any relevant issues or concerns arising.
22nd September 2016
ACCC announced it would not oppose the proposed acquisition.
* Total Review days = Total business days less public holidays and time during which the review was suspended.