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Legal reform is essential to prevent companies pushing the boundaries of Australia’s informal regime, chair of regulator says.
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ACCC calls for more ammunition to prevent uncompetitive mergers
13 April 2023
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10 minute read
The ACCC lacks the legal ammunition to combat anti-competitive mergers, the chair of the regulator Gina Cass-Gottlieb says, and the law urgently needs reform.
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Ms Cass-Gottlieb said Australian law required a raft of changes to bring it into line with OECD practice and allow the regulator to scrutinise and prevent uncompetitive mergers before they went ahead.
Currently, the law prohibited mergers that were likely to result in a substantial lessening of competition but lacked a requirement to wait for ACCC clearance before completion – or even notify the regulator of the plan.
That meant the ACCC had to apply to the Federal Court to halt or unwind the merger if parties failed to abandon or revise problematic transactions.
“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 told the National Press Club in Canberra yesterday.
“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.”
At the moment, businesses proposing to merge could voluntarily seek the ACCC’s view either formally or informally, but Ms Cass-Gottlieb said reforms were essential to navigate a critical period of economic transition.
“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,” she said.
“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.”
The ACCC had proposed revisions that would move Australia’s merger regime closer to other OECD members.
They included a formal clearance model that would oblige merger parties to convince the ACCC that the proposed transaction was not likely to substantially lessen competition.
There would be a requirement that the ACCC be notified of mergers that met specified thresholds, and that these be suspended without regulatory clearance. The ACCC would have to be notified of transactions that fell short of a threshold but still raised competition concerns.
Non-contentious transactions could be granted a notification waiver so they could be dealt with quickly and the Australian Competition Tribunal would have the ability to review ACCC decisions.
Ms Cass-Gottlieb said the current informal regime was encouraging bad behaviour and companies “pushing the boundaries”.
“Given that there are no up-front information requirements for an informal review, merger parties are increasingly giving us late, incomplete, or incorrect information,” she said.
“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.”
“In global transactions, we often find that merger filings in other regimes that require mandatory clearances are prioritised over our voluntary informal regime. This has hamstrung the ACCC’s ability to assess mergers and prevent potentially anti-competitive mergers.”
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