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- Australian Competition and Consumer Commission (ACCC) Chair Rod Sims proposes a new formal merger process that would require ACCC approval
- He says effective control is essential to ensure markets remain competitive by preventing anti-competitive mergers
- The ACCC proposes changes to the mergers test to ensure it is focused on the competition that would be lost if the merger goes through
- Mr Sims proposes that special reforms should appropriately deal with big digital platform acquisitions
Australian Competition and Consumer Commission (ACCC) Chair Rod Sims is sounding the alarm over growing market power in the Australian economy and has “serious concerns” about the level of anti-competitive acquisitions.
In a speech to the Law Council of Australia, Mr Sims proposed a new formal merger process in which parties would seek the ACCC’s ‘clearance’ for mergers.
“Effective merger control is essential to ensure markets remain competitive by preventing anti-competitive mergers,” he said.
“Australia’s current merger laws are failing to adequately protect competition, however, and so need to be changed.”
The ACCC has been largely unsuccessful in stopping mergers in the past. It failed to stop AGL purchasing Macquarie Generation and was unsuccessful in its lawsuit against TPG and Vodafone’s $15 billion merger. It also recently raised eyebrows over NAB’s acquisition of Citi’s consumer business.
Currently, to prevent a merger that ACCC believes is anti-competitive, the consumer watchdog must satisfy the Federal Court that the proposed purchase would substantially reduce competition in the future.
“The reason we are proposing change is not because we are worried about losing court cases, it is because we have serious concerns about the level of competition in our economy and our ability under the current law to prevent further consolidation via anti-competitive acquisitions,” Mr Sims said.
Alongside wanting to give clearance to merger proposals, the ACCC proposed changes to the mergers legal test in order to clarify it, ensuring it is focused on the competition that would be lost if the merger goes through, and to account for changes in market structure that make markets less competitive.
It also believes that merger legislation should take into account the fact that acquisitions of rivals by businesses with significant market dominance in a market are more likely to cause economic harm.
Mr Sims additionally proposed special reforms to appropriately deal with big digital platform acquisitions, because even purchases of fledgeling competitors might have long-term consequences.
“Our present regime is not capturing these purchases,” he said.
“Even with these changes, however, there will still be mergers that raise significant concerns for us that are unlikely to be captured. But the proposals are intended to shift the dial.
“We need merger reform to restore and maintain effective competition in Australia.”
