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ACCC bangs the drum for merger regime overhaul

The chair of the competition watchdog has reignited the debate on reforming merger laws, suggesting it is crucial to protecting competition.

In a speech to the Competition Law and Economics Workshop jointly hosted by the University of South Australia (UniSA) and the Australian Competition and Consumer Commission (ACCC), the chair of the competition watchdog said that “significant challenges” facing competition law and policy need to be confronted and solved if the Australian economy is to be effective for its populace.

Reiterating his stance on reform, as detailed to the Law Council of Australia in August, ACCC chair Rod Sims said that innovation, productivity and the welfare of Australians depended on there being an adequate level of competition.

He told the workshop attendees: “We are hearing a range of views both for and against various elements of our proposals and about the need for reform. Events like this workshop play an important part in continuing the discussion.

“A common theme coming through in the commentary from the advisors in particular has been, ‘why change the system when it is working well?’ My response to this is: For whom is it working well? For big business? What about the economy?’

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“As the agency charged with administering merger law, we do not consider it is working well.”

Mr Sims said three main competition issues that needed to be addressed to protect the health of the economy were merger law reform, the need to prove the future in competition cases, and the role of new regulation for digital platforms.

“Merger control is critical to protecting and promoting competition. It is the gatekeeper, protecting us from the negative effects of increases in concentration,” Mr Sims said.

“If we are serious about protecting competition in this country, we must ensure our merger control regime works as effectively as possible, and that it is consistent with international best practice.”

Touching on mergers and anti-competitive partnerships, he added: “The fundamental issue is that when applying our ‘substantial lessening of competition’ test in merger cases and other competition cases, the approach taken by the courts currently requires the ACCC to prove what is likely to happen in the future, rather than considering the overall interference to the competitive process which will be caused by the acquisition of a key player by its closest competitor or by other anti-competitive behaviour.

“The problem with the existing legal test is that it is being confined to what is currently known and provable about future developments.

“In my view, the effectiveness of our competition laws is at stake.”

Mr Sims also outlined certain challenges the ACCC faces when reviewing merger cases on a day-to-day basis.

“Increasingly we are having difficulty getting the information we need to conduct our merger assessments. We are also put under inappropriate time pressure, and we face threats to complete. We are also hearing of more mergers only shortly before they are to complete,” Mr Sims said.

“Indeed, ACCC Commissioners observe that the approach of companies to Australia’s merger processes is sometimes contemptuous.”

Mr Sims then outlined global developments in the “hotly debated” area of ex-ante regulation of digital platforms.

“The ACCC is in the thick of this debate,” Mr Sims said.

“Around the world, there is growing recognition among relevant authorities that existing anti-trust laws have not held up well to the challenges posed by digital markets.”

The ACCC will consider the need for sector-specific regulation to address the competition and consumer concerns in digital platform markets as part of the five-year digital platform services inquiry.

“Our advice will be provided in a report of the Digital Platform Services Inquiry which is due to the Treasurer in September 2022. Importantly, we will seek industry views on this crucial question, and we will liaise closely with the Commonwealth Treasury,” Mr Sims said.

[Related: ACCC pushes for merger law reform]

ACCC bangs the drum for merger regime overhaul
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Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

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