Merger regulation is a key element of any effective competition law, Australian Competition and Consumer Commission chairman Graeme Samuel told the merger market conference in Sydney today.
It aims to preserve competitive market structures and give market participants incentives to compete, rather than rely on ex post regulation of anti-competitive conduct, he said. By preventing transactions that damage the competitive structure of markets, section 50 of the Trade Practices Act 1974 reduces the likelihood of such competitive conduct issues arising.
However, myths had developed about ACCC mergers reviews which were busted today by Mr Samuel.
The first myth was that the ACCC was adopting a tougher line by blocking more mergers.
"This …arises from a very simplistic and piecemeal statistical comparison of the proportion of matters opposed or allowed subject to a number of undertakings over past years," he said. “Such statistical comparisons are superficial nonsense. I do not intend to enter into a battle of statistics ... However… statistics can be interpreted in different ways to provide different conclusions. You may recall that last year, some commentators were…saying that the ACCC was letting through too many mergers. Now apparently, the same data is being used to say that the ACCC is blocking too many mergers."
The second myth was that of a lack of timeliness in ACCC decisions, particularly around the recent NAB/AXA matter.
"The ACCC's timelines for merger reviews are best practice and are considerably shorter than many other jurisdictions and in particular the EU, the US and the UK. In NAB/AXA the review was undertaken and decision reached within the ACCC's usual timelines. The original decision to oppose was made on the 19 April. Subsequent to the decision, NAB approached the ACCC and indicated that it wished to consider the possibility of offering undertakings to alleviate the ACCC's concerns. The undertaking process … was in the hands of NAB and AXA. …[The ACCC] didn't have an undertaking capable of being consulted upon until 9 August and …[the] decision on the undertaking was made in less than five weeks, including a two to three week public consultation period."
The third myth arises from a misunderstanding about the release of Statements of Issues. These are not necessarily a good anticipator of the ACCC's final decision and are not a draft decision. They provide preliminary guidance on the ACCC's concerns and focus market attention and provoke comment and information on areas of interest.
The fourth myth relates to Public Competition Assessments – they are not the definitive and all embracing statement of reasons for an ACCC decision. This is not practical; certain aspects of market inquiries and ACCC analysis may need to be held back due to confidentiality concerns; and if parties should seek to proceed despite ACCC opposition, further evidence and issues may come to light during the course of court proceedings.
The fifth myth is that meetings with Commissioners may significantly advance the prospects of ACCC clearance. But: "they are relatively brief and superficial and in all honesty, don't assist with the final deliberations. Further individual Commissioners will not be able to express a view as to what the final decision of the Commission will be prior to it making it."
Mr Samuel warned again that the ACCC was not influenced by media speculation about what issues it should or should not consider, or how its process should run.
"If any of you are thinking of encouraging parties you act for to go down the path of attempting to manipulate the ACCC by using the media then you will be doing your clients absolutely no favours," he said.
The sixth myth related to the use of formal information requests. In the vast majority of reviews, voluntary information requests provided the information needed. However, formal information requests were invaluable in obtaining truthful information and could generate substantially more comprehensive and accurate information. The ACCC was mindful of its responsibility in using the notices and the burden imposed on recipients. The number issued is very low against the number of reviews undertaken.
Mr Samuel said the ACCC was often referred to practices in overseas jurisdictions about access to information from third parties but these comparisons were superficial. Even in the EC where, after certain stages of review were complete, parties had access to the investigation file, this file was redacted of all confidential information.
A seventh myth was a claimed sudden focus on coordinated effects when reviewing a merger as "some commentators have described coordinated effects as my 'new toy'. Actually this is not the case at all. The ACCC has always examined mergers on the basis of coordinated, as well as unilateral effects."
Mr Samuel said that he was busting the myths to preserve the integrity of the ACCC's merger review process – which is regarded as international best practice and properly receives acclaim from other regulators in the International Competition Network. The ACCC is continually working to make its merger review process as streamlined, efficient, flexible and transparent as possible to minimise the impact of the review process on non-problematic mergers, but at the same time, deal with problematic mergers effectively, he said.