Australian merger laws tilted towards anti-competitiveness: ACCC

ACCC is calling for reforms to Australia’s merger laws as they are currently tilted too much towards allowing potentially anti-competitive acquisitions.

Speaking to the National Press Club, Gina Cass-Gottlieb, chair of the ACCC, called for reforms to Australia’s merger laws to protect competition in Australia’s economy during a critical period of transition.

She expressed her concern that consumers and the Australian economy are “exposed” in the current environment of uncertainty and vulnerability, to supply chain pressures, geopolitical issues and climate emergency.

Cass-Gottlieb added that technological change and the power of digital platforms add 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," Cass-Gottlieb said.

Australia’s current laws prohibit mergers that are likely to result in a substantial lessening of competition.

However, the laws do not require parties to notify the ACCC of planned mergers, or to wait for the watchdog's clearance before they complete deals.

This means that the ACCC must apply to the Federal Court to have the merger halted or unwound if parties do not abandon or revise transactions that the regulator 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,” 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," the ACCC chair said.

Businesses or companies proposing to merge can voluntarily seek the ACCC’s view either through an informal pre-assessment process or a voluntary formal authorisation process.

The ACCC is proposing a range of changes to Australia’s merger regime which would bring it into line with many OECD countries.

A formal clearance model would mean that merger parties would need to convince the ACCC that the proposed transaction is not likely to substantially lessen competition.

The Australian Competition Tribunal would have the ability to review ACCC decisions.

A formal regime would also include a requirement that the ACCC be notified of mergers that meet specified materiality thresholds.

There would also be clear requirements for relevant information to be provided to the ACCC upfront.

Non-contentious transactions could be granted a notification waiver so they could be dealt with quickly.

“We are finding that businesses are pushing the boundaries of the informal regime."

"Given that there are no up-front information requirements for an informal review, merger parties are increasingly giving us late, incomplete, or incorrect information,” Cass-Gottlieb 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,” she added.

Cass-Gottlieb added: “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," Cass-Gottlieb concluded.