Australia’s merger laws are no longer suitable and have the potential to allow ‘anti-competitive’ mergers, according to the Australian Competition and Consumer Commission (ACCC) chair Gina Cass-Gottlieb.
In a speech at the National Press Club in Canberra, Cass-Gottlieb called for reforms to Australia’s merger laws to protect competition in the Australian 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,” Cass-Gottlieb said.
She added that technological change and the influence 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.”
According to the ACCC, 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 ACCC clearance before they complete the merger.
The consumer watchdog said due to this, 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 ACCC considers are 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 has proposed a range of changes to Australia’s merger laws which, it said, would bring them into line with many OECD countries.
This includes a formal clearance model, which means that merger parties would need to convince the ACCC that their 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 - a requirement that these transactions be suspended without ACCC clearance and a ‘call in’ power for the ACCC to scrutinise transactions that don’t meet the notification threshold but still raise competition concerns.
Part of this formal regime will include the need to provide relevant information to the ACCC upfront, the watchdog said. It added that 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,” Cass-Gottlieb continued. “Given that there are no up-front information requirements for an informal review, merger parties are increasingly giving us late, incomplete, or incorrect information.
“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.”
Cass-Gottlieb added that, in global transactions, merger filings in other regimes that require mandatory clearances are prioritised over the ACCC’s voluntary informal regime.
“This has hamstrung the ACCC’s ability to assess mergers and prevent potentially anti-competitive mergers.”
The ACCC has also proposed changes to the legal test of how mergers are assessed.