Australia’s merger laws are no longer fit for purpose and are allowing anti-competitive mergers to proceed, the Australian Competition and Consumer Commission has argued.
Although Australia’s current laws prohibit mergers that are likely to result in a lessening of competition, they do not require parties to notify the ACCC of planned mergers, or to wait for ACCC clearance before they complete the merger.
This means that the ACCC has to apply to the Federal Court to have the merger halted or unwound if parties do not abandon or revise transactions that the body considers are anti-competitive
As a result, the ACCC is now calling for a formal clearance model that would mean merger parties would need to convince the ACCC that the proposed transaction is not likely to substantially lessen competition, and the Australian Competition Tribunal would have the ability to review ACCC decisions.
According to the ACCC, 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.
Non-contentious transactions could be granted a notification waiver so they could be dealt with quickly, the competition body added.
“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,” ACCC chair Gina Cass-Gottlieb said, adding that technological change and the power 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.”
In addition, the ACCC claimed that “technological change and the power of digital platforms” was adding to “complexity” in the M&A space.
Proposed changes would mean “modernising” factors considered as part of the assessment process, including whether the merger would result in a merged party gaining increased access to data and technology.
In December the ACCC refused to authorise the proposed network-sharing deal between Telstra and TPG Telecom, a deal which would have given TPG access to 3,700 mobile network assets, with the watchdog arguing it would likely have a negative impact on coverage, network quality and innovation.