The competition watchdog says the nation’s corporate merger laws are lagging behind those in other developed countries and this is costing consumers, urging the federal government to press ahead with a proposed toughening of the merger regime.
Australian Consumer and Competition Commission (ACCC) chair Gina Cass-Gottlieb said new research had revealed up to two-thirds of companies were failing to notify the watchdog of planned mergers, which meant it could not consider the potential cost to consumers.
She said the biggest increase in mergers had been in sectors such as retail, health and manufacturing, and this had occurred amid a long-term rise in market concentration.
“There is a significant falling short in the current voluntary reporting regime,” Cass-Gottlieb told this masthead.
“The most significant increases in merger activity are occurring in really key sectors for the Australian economy and with direct impact on consumers’ everyday lives … All of that says it’s time for there to be an updating and a reform which would be consistent with the majority of OECD nations.”
The regulator wants to be the first decision maker of mergers, force companies to notify the ACCC of planned acquisitions, and have a fast-track waiver process to allow non-contentious mergers to be dealt with within 20 days, according to its submission.
There should also be a separate process to have a merger considered on net public benefits, the ACCC stated.
Under the current scheme, companies are not required to notify the regulator of the planned merger or wait for its approval before the deal is finalised, forcing the ACCC to take companies to the Federal Court, seeking to have the merger unwound if it is deemed anti-competitive. However, the regulator has lost the vast majority of those cases.
Lat year, Chalmers said Australia’s rules might be too permissive and paved the way for mergers that did not deliver benefits to consumers, workers and the national economy. He said that while they did not explain all of Australia’s productivity problems, they might have contributed to weaker productivity in recent decades.
Research commissioned by the Competition Review Taskforce shows there are between 1000 and 1500 mergers a year, with only 330 of those notified to the ACCC. About half of those acquisitions are made by the largest 1 per cent of businesses.
Cass-Gottlieb pointed to Woolworth’s planned merger with Petstock , which had helped unveil the pet retailer’s “large number of concerning acquisitions” that had affected competition but had not been disclosed to the regulator.
She said the rise in market concentration had resulted in a “noticeable weakening of the intensity of competition” in a range of sectors.
“The record of what has been achieved during the informal regime, which in the vast majority of cases is occurring through ACCC scrutiny, we need to bring the benefits of that through a mandatory notification scheme,” Cass-Gottlieb said.
“Because it’s voluntary and the vast majority are not notified, we can’t assure the company we’re doing the job we’re asked to do [which is to maintain a healthy level of competition].”
Business groups are concerned giving the ACCC greater power to block mergers would hurt the economy and damage Australia’s international reputation.
In her first interview since Prime Minister Anthony Albanese announced a year-long ACCC investigation into supermarket prices, Cass-Gottlieb said she was confident the inquiry would benefit consumers’ hip pockets.
The regulator will probe the difference between the prices received by producers at the farm gate and those paid by consumers at the checkout, as supermarkets come under increased pressure over price gouging.
“There is considerable value in shining a really strong light and using all of the powers we have to identify what the pricing practices are, where the margins are,” Cass-Gottlieb said.
“We do know these very deep, well-informed reviews produce benefits for competition and consumers.”
The last ACCC supermarket inquiry in 2008 led to the abolition of restrictive tenancy provisions that might have prevented shopping centres from leasing space to competing supermarkets.
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