With an eye on Big Tech, ACCC seeks sweeping merger law reform

Australia's archaic merger laws are costing us dearly, Rod Sims has warned.

Australia's archaic merger laws are costing us dearly, Rod Sims has warned. Photo: TND

You’re paying too much for everything from electricity and air travel to phone plans because Australia’s outdated merger laws allow corporate behemoths to scoop up their competitors, ACCC chair Rod Sims says.

In a landmark speech on Friday, Mr Sims called for an overhaul of our merger laws, saying key industries like supermarkets, banking and insurance are being increasingly dominated by just a few large players.

He said the law must be changed so that the ACCC approves mergers before they go ahead, rather than protesting problematic tie ups in court.

“Companies with market power raise prices without threat of competitors stopping them,” Mr Sims told The New Daily in an interview on Friday.

“Each company wants to maximise their profits, and you want them to do that facing competition so they’ll have competitive prices and products.”

One recent example is mobile phone plans, which Mr Sims said rose in price substantially after a merger between TPG and Vodafone.

Another example is electricity prices, which rose after an AGL merger. 

Australia’s supermarket duopoly also harms the economy, Mr Sims said.

“Small businesses and farmers are largely reliant on Coles and Woolworths to access grocery shoppers,” he explained on Friday.

“This power imbalance places small businesses and farmers in … precarious positions with consequent damage to our economy.”

And this issue isn’t just about prices – your data is also valuable.

The ACCC is worried tech giants such as Google, Facebook and Amazon – which have together bought more than 500 companies since 2010 – are taking advantage of weak our merger laws to disadvantage consumers.

“We are exchanging access to our personal data and attention for so-called ‘free’ services,” Mr Sims said in his speech on Friday.

“But [we] have little choice, knowledge or control over how our data is being used.”

Overhauling merger law

So, what does Mr Sims think we can do about all this?

He has called on the government to untie the ACCC’s hands by flipping the merger law regime on its head.

The ACCC wants to move from a system which forces it to oppose a merger in court to one where companies would need to contest ACCC decisions blocking corporate tie-ups.

Under current laws, companies are not required to get ACCC permission to merge, forcing regulators to prove deals will hurt consumers in court.

That’s difficult, though, because it requires Mr Sims and his colleagues to prove in court that a merger will substantially lessen competition, which is often hard or even impossible because the future is always uncertain.

For context about how hard it is, the ACCC hasn’t actually won outright in a contested merger case before the courts since 1992.

Mr Sims said the Australian system is out of step with how merger law operates in other countries like the United States, Europe and Canada.

“I want to catch up with the rest of the world,” Mr Sims said.

“Have a proper merger approval process where we make the decision, and if you [a company] don’t like it you go to court.”

Mr Sims also wants the government to expand the merger test in the law to focus more on how a corporate tie-up will change competition and also to include consideration of how potential rivals could be lost in a merger.

“We need a mindset change. Our economy would be better served by more companies deciding to compete rather than to acquire,” he said.

Big Tech’s big footprint

Australia’s merger laws must also single out tech giants, Mr Sims said.

Google, Apple, Facebook and Amazon have become multinational behemoths over the last two decades and while each has innovated in their own ways, they’re also limiting competition and hoovering up data.

Mr Sims said these companies should face a tailored merger process.

“The probability of competitive harm that needs to be established should be lower than that which applies for acquisitions in the economy,” Mr Sims said in his speech.

“This reflects the very real risk that acquisitions by the large digital platforms may have significant competitive impacts which are often not easy to foresee and establish.”

Mr Sims conceded the government must find time to address mergers before it will have time to consider the ACCC’s suggestions.

“Government has got its hands full with the pandemic and we should not be adding to their burden,” he said. “We’re starting a debate.”

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