Australia's corporate watchdog is looking at whether TPG Telecom's planned $1.6 billion takeover of iiNet will hurt competition among internet providers.
The Australian Competition and Consumer Commission wants more information about whether the proposed tie up will lessen competition in the retail fixed broadband sector.
"The ACCC is exploring the extent to which the acquisition of iiNet will reduce competition by reducing the likely competitive tensions in respect of pricing, innovation and service quality," chairman Rod Sims said on Thursday.
"The ACCC is also considering whether the competitive constraint posed by the remaining competitors, namely Telstra, Optus, M2 and the much smaller market participants, would be sufficient to prevent a substantial lessening of competition in the supply of fixed broadband services."
Mr Sims said the ACCC had received a number of submissions from consumers concerned the tie up would lead to a decline in iiNet's customer service levels.
However, he said the planned takeover was unlikely to lead to competition concerns in the wholesale or mobile sectors.
If the merger is allowed to proceed, the combined iiNet/TPG would become Australia's second biggest fixed-line internet provider, behind Telstra.
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