Competition in Australia faces big challenges

15 October 2021

Significant challenges facing competition law and policy need to be confronted and solved if our market economy is to work for all Australians, ACCC Chair Rod Sims said today. Innovation, productivity and the welfare of Australians depends on there being an adequate level of competition.

In a speech to the Competition Law and Economics Workshop jointly hosted by the University of South Australia and the ACCC, Mr Sims said three main competition issues needed to be addressed to protect the health of our economy: 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.”

Mr Sims kicked off a debate about reform of merger laws during a speech to the Law Council of Australia in August. This debate had started well, Mr Sims said.

“We are hearing a range of views both for and against various elements of our proposals and about the need for reform.”

Mr Sims also pointed to the issues caused by the ACCC’s need to prove the likely future state of competition in merger cases and cases involving anti-competitive conduct.

“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,” Mr Sims said.

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

The ACCC’s appeal in the NSW Ports case will provide an opportunity for the Full Federal Court to consider this issue further. 

“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.

ACCC Chair Rod Sims’ full speech can be found here: Competition in Australia faces big challenges

Background:

ACCC Chair Rod Sims’ annual address at the Law Council of Australia's Competition and Consumer Workshop on 27 August 2021 where he started a debate on  proposals for changes to Australia's merger laws can be found here: Protecting and promoting competition in Australia

Release number: 
158/21
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