The Telecom New Zealand-owned Australian telecommunications company AAPT will formally oppose Telstra 's proposed $A300 million acquisition of the ISP OzEmail.
Last week, Telstra revealed it was negotiating to buy the ISP, a move believed to give Telstra eight times the customer base of its next competitor, Optus.
Telstra BigPond is currently the largest player in the Australian Internet market, with OzEmail the second largest.
Brian Perkins, AAPT's regulatory and legal director, said AAPT would formally oppose the bid because, if successful, the Telstra-OzEmail pairing would see a monopoly of the local market.
"This will stifle the development of the industry. They will be able to tie up content, advertisers, and they'll have a classic base for e-commerce," Perkins said.
"Taking away OzEmail -- Telstra's closest, most aggressive competitor -- is classic play. This is what any number one will do: get rid of number of two to leave the playing field clear for themselves," he also said.
An Australian Competion and Consumer Commission spokesperson said the commission was currently reviewing the proposed bid, and that it was already receiving submissions from relevant undisclosed market "participants".
"At the moment, we have no idea if it (the proposed acquisition) breaches the Trade Practices Act," the spokesperson said, adding that the investigation could last weeks.
The spokesperson said the focus of the investigation was to calculate the future implications of the Australian Internet industry if the deal is successful.
Telstra declined to comment.