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ACCC calls for Australia merger regime overhaul

By Jessica Penny
3 minute read

Australia’s merger laws may be letting anti-competitive deals slip through the cracks, the ACCC chair said. 

Australian Competition and Consumer Commission (ACCC) chair, Gina Cass-Gottlieb, has called for reforms to Australia’s merger laws, claiming they are “no longer fit for purpose” in protecting competition in Australia’s economy.

“I am concerned that consumers and the Australian economy are particularly exposed in the current environment of uncertainty and vulnerability from supply chain pressures, geopolitical issues, and the climate change transition,” Ms Cass-Gottlieb said, adding that technological change and the power of digital platforms were adding to this complexity.

“Part of responding to these challenges is to encourage competitive, innovative, and dynamic markets. Australia’s current merger regime is not well placed to deal with these issues.”

Namely, current laws prohibit mergers that are likely to result in a substantial lessening of competition. However, they do not require parties to notify the ACCC of a planned merger, or to wait for clearance before a merger is completed. 

Hence, the ACCC must apply to the Federal Court if it wishes to have a merger halted or unwound, if parties do not abandon or revise transactions that the ACCC considers anti-competitive. 

“The ACCC needs to have the tools necessary to be able to properly scrutinise and, if necessary, prevent mergers that are likely to substantially lessen competition,” Ms Cass-Gottlieb said.

“Without these tools, some markets are particularly vulnerable to being adversely affected by further consolidation. In particular, markets that already have large incumbents with positions of market power and markets where it is difficult for new rivals to enter.”

As such, the competition watchdog has proposed a range of changes to Australia’s merger regime, which it said would bring Australia in line with many Organisation for Economic Co-operation and Development (OECD) countries. 

Under its proposal, the ACCC said merger parties would need to convince the body that the proposed transaction would not substantially lessen competition. Further, the Australian Competition Tribunal would have the ability to review the ACCC decisions.

This model would also include a requirement that the ACCC be notified of mergers that meet specified materiality thresholds, that these transactions be suspended without clearance, and a “call in” power for the ACCC to scrutinise transactions that don’t meet the notification threshold but still raise competition concerns. 

Commenting on the need for reform, Ms Cass-Gottlieb went on to say that businesses are currently “pushing the bounds” of the informal regime.

“An increasing number are threatening to complete their transaction before we have finalised our review. This leads to the situation where we find ourselves negotiating with the merger parties to obtain sufficient information and time to conduct our review.”

According to Ms Cass-Gottlieb, global transactions that require mandatory clearances have a greater sense of urgency than Australia’s voluntary informal regime.

“This has hamstrung the ACCC’s ability to assess mergers and prevent potentially anti-competitive mergers,” she concluded.

The proposal also follows the ACCC, earlier this month, flagging preliminary concerns regarding ANZ’s proposed acquisition of Suncorp Bank.

Specifically, the competition watchdog explored whether the deal would undermine competition across the banking sector and is seeking stakeholder feedback on issues including the extent to which the acquisition would impact the likes of lending rates, deposit fees, and consumer choice.