Australian consumers and businesses will pay higher prices and have less choice if anti-competitive mergers are able to continue to proceed, the ACCC has warned in a submission to the government’s Competition policy review.
The preliminary submission, published today, responds to the three options put forward in a recent Treasury paper on merger reform and makes the case for the ACCC’s proposed changes, released earlier this year.
“Evidence shows that Australia’s economy is being impacted by weakened competition in many sectors, risking higher prices for consumers and businesses,” ACCC Chair Gina Cass-Gottlieb said.
“The ACCC does not have the tools it needs to see and prevent all anti-competitive mergers, and it means that harmful mergers may be taking place under the radar.”
Under the current merger regime in Australia, there is no law requiring merger parties to notify the ACCC of proposed acquisitions or to wait for ACCC clearance before proceeding. If a potentially anti-competitive merger is completed without the ACCC reviewing it, the ACCC must take Federal Court action to have the deal unwound.
“The lack of a requirement for firms to tell the ACCC about proposed mergers makes Australia an outlier among most OECD economies,” Ms Cass-Gottlieb said.
“Mergers proceeding without our knowledge pose clear risks to our competitive market economy and the prices and service quality provided to small businesses and consumers.”
“We recognise that there are risks of impact on economic activity if the regime is too restrictive or uncertain. Our proposed merger reforms are designed to allow an efficient, transparent and low-cost approval for the vast majority of mergers that do not raise competition concerns, so businesses can proceed quickly and with certainty.”
“One of the options put forward in the Treasury paper proposes to make it compulsory for the ACCC to be notified of mergers, but for the Federal Court to resolve whether a merger is likely to substantially lessen competition. It doesn’t deal with the underlying concerns of the current enforcement-based merger regime,” Ms Cass-Gottlieb said.
“Another option proposed involves making it voluntary for parties to notify the ACCC, which doesn’t address our concerns about anti-competitive acquisitions taking place without our knowledge.”
“The option put forward by the ACCC achieves the right balance, with minimal regulatory burden for those acquisitions that do not have anti-competitive effects, and a structured, transparent and timely process for those acquisitions where there are potential anti-competitive effects.”
The ACCC’s preliminary submission details how under the current informal enforcement regime, companies seeking to acquire rivals are increasingly using tactics to pressure the ACCC to not oppose transactions, such as delaying notifying the ACCC.
“We shouldn’t have a process that is prey to legal brinkmanship, with all the uncertainty and expense that entails,” Ms Cass-Gottlieb said.
“Consumers, small businesses and farmers will benefit from the ACCC reforms, which will include high levels of transparency and provide certainty. But we also believe that companies and other businesses concerned about their suppliers, customers or rivals merging will also benefit.”
“The review underway represents a once-in-a-generation opportunity to set rules for competition that drives dynamism, productivity and restraint on prices in Australia, and that bring us into line with our international peers.”
The preliminary submission can be viewed on the ACCC website. The ACCC will be making a further, more detailed submission to Treasury, in late January in accordance with the Treasury consultation process.