The proposed joint venture between Vodafone Australia and Hutchison Telecommunications has been stalled by the Australian Competition and Consumer Commission, which said the merger raised competition concerns in the short- to medium-term in the mobile telephone and mobile broadband markets.

"The ACCC is concerned that the removal of Hutchison as a vigorous and effective competitor will lead to increased prices for customers in the retail mobile telephony and MBB services segments in the retail mobile telecommunications services market," it said in a report.

There is also a concern that existing network sharing relationships between Vodafone and Optus and Hutchison and Telstra could lead to anti-competitive coordination under the joint venture. The ACCC has called for submissions from all market participants to assist in its proper investigations. A final decision is expected on 6 May, it said.

The merger requires the approval of the ACCC and HTA shareholders, who are meeting in Sydney on Thursday to vote on the proposal. Vodafone and HTA have said they hope to have the joint venture established by mid-year.

The merger of the third and fourth largest telcos in Australia will be known as VHA Pty Ltd, with each company to own a 50-per cent stake. The unlisted Vodafone will be the lead brand in the partnership, with the future of the '3' brand, owned by the listed HTA, uncertain.

The two companies had announced last month that they would form a joint venture, giving it about six million customers and combined total revenue of about $4 billion. The joint assault on the mobile market depends on the go-ahead from the ACCC, which has received submissions from customers, rivals and retailers.

In case the merger goes through, VHA would hold an estimated 27 per cent of the mobile subscriber market, which would be pared down to three big players, the others being Optus (about 33 per cent) and Telstra (40 per cent).

Both Telstra and Optus have made submissions about the merger, with Optus writing to the ACCC on Tuesday to outline concerns about the possibility of VHA hoarding mobile phone spectrum.

Telstra is also engaged in a legal battle with Hutchison over the ownership of a joint venture between the two, with Telstra claiming VHA would not be same entity with which it entered into the agreement.

In a statement of issues released yesterday, the ACCC invited further submissions, and named a number of potential problems. The ACCC's most fundamental concern is that the removal of Hutchison from the marketplace will lead to a weakening in competition and an increase in prices.

The commission said that while Vodafone and Hutchison currently compete for the lower end of the mobile market, the merged entity might simply match Optus and Telstra's prices, leaving "price-sensitive customers" high and dry.

The ACCC dismissed concerns raised by the big two telcos about Hutchison and Vodafone hoarding unused mobile phone spectrum. This is significant because the growth area in mobile phones is non-voice data, such as video, web browsing and pictures, all of them "spectrum-intensive".