Treasurer has eyes on mandatory company merger regime
Poppy Johnston and Andrew Brown |
Businesses seeking to merge will have no choice but to notify the national competition regulator first, under sweeping changes proposed by the federal government.
The reworked merger rules will put corporate marriages primarily in the hands of the Australian Competition and Consumer Commission and ditch the voluntary disclosure scheme in favour of a mandatory regime.
Under the voluntary regime, the ACCC only assesses about a quarter of all mergers, restricting its visibility and raising the chance of an anti-competitive combination slipping through the cracks.
Treasurer Jim Chalmers said the voluntary scheme already in place was too “hit and miss”.
“Mergers reform is a big part of … making our economy more competitive, and that’s why we’re embarking today on the biggest changes to the mergers regime in something like 50 years,” he told ABC Radio on Wednesday.
“A more competitive economy means more choices for people at fair prices and our economy is not competitive enough as it stands and it’s been getting less competitive over recent decades.”
Competition policy has become a focal point for the government as it vies to boost flagging productivity and spur innovation.
It has launched several probes and investigations spanning different sections of the economy, including the supermarket sector that’s under fire for its pricing practices.
Most Australian sectors are dominated by a few big players and Treasury research suggests a lack of competition increases the cost of doing business and can lead to higher prices and lower wage growth.
Dr Chalmers said the current system meant it was not known if the right mergers were properly examined, with the changes allowing for more scrutiny on ones that are concerning.
“Most mergers have obvious economic benefits, but there are some which are concerning where they expand and entrench market power, or where they substantially lessen competition,” he said.
“The regime is faster and simpler, more targeted, more transparent and stronger. But it means that good mergers can proceed quicker and concerning mergers receive a bit more robust scrutiny.”
Tougher merger rules have long been on the ACCC’s wish list and while businesses viewed some of its earlier proposals “excessive”, the treasurer believes a middle ground has been found.
Under the changes, merger laws will be updated to better handle serial acquisitions, which is where a firm incrementally acquires a number of smaller companies and the overall process simplified.
The treasurer will further outline the merger changes when he delivers the Bannerman competition lecture in Sydney, where he will say Australia is one of only three OECD countries without compulsory merger notification.
ACCC chair Gina Cass-Gottlieb welcomed the changes.
“These proposed changes are significant and will reinforce public confidence in Australia’s competition laws,” she said.
The government also wants to appoint law and economics academic and merger expert Philip Williams AM as an ACCC commissioner and to set up a public register of all mergers and acquisitions.
The laws are set to come into force at the start of 2026, provided they make it through parliament.
AAP
