Sydney Roosters tragic and ACCC chief Gina Cass-Gottlieb has run into some expected and unexpected opposition from the Law Council and Productivity Commission to her proposed merger reforms, which are akin to a sledge hammer to squash an ant according to some lawyers.
Cass-Gottlieb has called for mandatory merger notification above a yet-to-be-determined threshold, but the competition mafia note that this already happens with the vast majority of mergers.
Her recommendations – which include new criteria to be added to the rules, including entrenching market power and control of data – are presently before Treasury.
The debate comes as the ACCC surprisingly blocked Woolworths’ multimillion-dollar takeover of John Krnc’s Karabar IGA outside Canberra for the second time in 15 years on diversity grounds.
The ACCC has put the $46.5bn behemoth on notice and drawn a line in the sand on creeping acquisitions, where giants buy a string of little assets which on their own may mean nothing but collectively boost market share.
The mafia was supported in some submissions to Dr Daniel Mulino’s House economics committee inquiry into “promoting economic dynamism, competition and business formation”, with the Productivity Commission unimpressed with the merger reform proposals.
In its recent five-year review into productivity, the PC said: “Overall, there does not appear to be a strong case for the implementation of a new formal authorisation regime as proposed.”
It added: “It is unclear whether the need for legislative reform would remain if the regulator were to augment its approach to litigation.”
Former ACCC commissioner Stephen King now sits on the PC and these views are not far from his own on the topic.
The argument is that if the ACCC lifted its game, legal changes might not be necessary.
Others like former ACCC boss Alan Fels have come out strongly in favour of the changes, arguing the lawyers have improved their tactics and are running rings around ACCC attempts to block mergers.
On productivity, Microsoft urged more transparency and a whole-of-government approach to avoid overlap.
It told the inquiry present tech sector reviews include “the 116 privacy reform proposals published in the Privacy Act Review Final Report; the Department of Prime Minister and Cabinet’s Australian Data Strategy; the Minister for Home Affairs’ 2023 Cyber Security Strategy; the eSafety Commissioner’s Online Safety Reforms; the ACCC’s Digital Platform Services Inquiry; the Digital Transformation Agency’s Digital Identity Legislation; the Department of Home Affairs’ Critical Infrastructure Legislation; the Digital Transformation Agency’s Data Hosting Certification Framework”.
It noted the Australian tech industry had grown into a critical pillar of the economy, contributing $167bn to GDP per year, equivalent to 8.5 per cent of the total. This was made up of a direct contribution of $76bn and an indirect one of $92bn. The tech sector collectively is the third-largest contributor to GDP in Australia – just behind mining and finance and ahead of healthcare, construction and retail.
Ironically, one case cited by the ACCC on the need for mandatory merger notification was the 2021 deal where Virtus, advised by the pre-ACCC Cass-Gottlieb, tried to buy Adora Fertility for $45m.
The ACCC was not notified but intervened and won an injunction to block the deal.
Most other jurisdictions require mandatory disclosure, but New Zealand is one of the few to load the dice in the ACCC’s favour in merger consideration.
Under Cass-Gottlieb’s plans the onus of proof is effectively reversed for all applicants, because the ACCC will only need to be satisfied the condition isn’t breached, whereas under present law it must prove it has been breached.
This is more difficult because it often relates to future activity and the courts have interpreted the law narrowly, often relying on self-serving claims by the merger proponents.
The government is yet to say how it will deal with the ACCC’s plea for more powers, including so call ex ante (before the fact) rules dealing with the technology companies on issues including artificial intelligence.
Quay Partners lawyer David Poddar argues the ACCC runs the merger process and is a victim of its own lack of transparency.
By way of example, its standard market inquiry letters when opening merger reviews ask for simple facts rather than offering some advice on the competition implications to prompt better responses.
A classic example of the lack of transparency is the decision not to release the details of the review of the failed ANZ cartel case, which cost the government $20m and effectively put the careers and lives of the effected parties on hold for the five years the matter took, before being abandoned.
Cass-Gottlieb was also involved in the matter as an adviser to successful immunity witness JPMorgan, which was eventually forced by the court to disclose the contents of the company’s factual investigation into the matter in question, as opposed to the legal advice, which is privileged.
This is the standard which now applies to immunity applicants. The legal privilege argument is being used by the ACCC as the reason why its own review of the ANZ case by ACCC chief operating officer Scott Gregson will not be released.
Separately, ACCC deputy Mick Keogh has received another five-year term after the federal government recommendation cleared the state governments.
Keogh was appointed to the ACCC on a part-time basis in 2016 and full-time as deputy in 2018.
The aforementioned Alan Fels is also leading an inquiry for the NSW government into the Transurban toll roads around Sydney, which has more than any comparable city.
Transurban is trying to extend its Melbourne monopoly by seeking ACCC clearance to buy the majority stake in Horizon, which runs the East Link toll road, the only one on the east coast not controlled by the company.
It argues because the tolls are set by government and there are competing roads it doesn’t have substantial market power, which is nonsense.
But having opened the door to the monopoly the onus lies with the state governments to control it with tighter regulations and shorter concessions.
Campbell leads GA
Greening Australia has a new boss with industry legend Heather Campbell moving on from Bush Heritage after four and a half years.
GA is a not-for-profit with a simple view that people thrive when nature does and a goal to plant 500 million natives by 2030 and clear 475,000 tonnes of pollutants from the catchment streams into the Great Barrier Reef.
Bush Heritage was established 30 years ago by Bob Brown to buy two blocks of land to stop logging. It has acquired 1.3 million hectares on 36 reserves around the country with 140 staff who work to protect, preserve and restore the land.
Campbell replaces longtime GA boss Brendan Foran. The former Landcare Australia boss previously served on the GA advisory council.
Campbell is motivated in part by a desire to work closer to her Yarra Valley base.
GA’s aim is nature-based solutions to protect and restore ecosystems and build a more resilient, biodiverse and sustainable planet.
Unions, miners in Pilbara IR fight
Unions have launched an extraordinary attack on BHP, Rio Tinto and the Minerals Council of Australia.
Junta holds goldminer’s Aussie CEO ‘for ransom’
Industry sources believe the Mali military government wants an extra $250m from Resolute Mining – and is detaining the company’s executives to force payment