Business warn new merger rules must be more than red tape

Business groups offer qualified support for Labor’s merger reforms, with a warning, as a former ACCC chairman says the changes are a ‘big win’ for the competition watchdog.

Jim Chalmers and ACCC chairwoman Gina Cass-Gottlieb. Picture: NCA NewsWire / Nikki Short

Business groups say Labor’s newly announced merger reforms must be carefully implemented to avoid wrapping companies in unnecessary red tape, as a former ACCC chairman said the changes were a “big win” for the competition watchdog.

Jim Chalmers on Wednesday unveiled major changes to the merger system, under which every proposed acquisition above a certain size would have to notify and receive approval from the regulator.

With the Albanese government intending to legislate the new rules this year ahead of a January start, opposition Treasury spokesman Angus Taylor said the Coalition would scrutinise the draft bill to ensure it “gets the balance right”.

“It’s important the government doesn’t confuse competition policy with competitiveness of the economy,” Mr Taylor said.

“Labor’s policies on energy, IR and tax are making Australia a less attractive place to do business.”

Allan Fels, the inaugural ACCC chairman, told The Australian that the reforms were a “big win” for the competition watchdog.

“The changes strengthen merger law in a sensible fashion,” Dr Fels said.

Reducing the involvement of the courts was a major benefit of the new, streamlined process that always has the ACCC as the initial decision-maker, he said.

“The courts have made heavy weather of the so-called substantial lessening of competition test, which requires the ACCC to prove the future.

“Courts are much better at determining whether an event has happened in the past, for example, a crime. They are not so good at making decisions about possible future economic events.

“At the same time there are safeguards, because there will be a right of appeal, though somewhat limited, to the competition tribunal headed by a judge, with expert economic and business members.

“And that tribunal has recently demonstrated its willingness to overturn ACCC’s decisions, for example the recent ANZ matter.”

Business groups offered qualified support for the reforms.

BCA chief executive Bran Black said it was important to remember the benefits of mergers, both to the economy and consumers.

Describing the new merger rules as “a significant piece of reform”, Mr Black said he was pleased that the government had taken into account big businesses’ concerns and not proceeded with the ACCC’s push to shift the onus on companies to prove a proposed acquisition would not substantially reduce competition.

“There is still a lot of detail that is to be determined and further consultation will be required with business on many important elements in this package,” he said.

“We need to ensure Australia’s merger regime doesn’t add further red tape to businesses. For example, the BCA expects to see reasonable and practical thresholds for merger notification.”

ACCI CEO Andrew McKellar said “competition is a good thing, but it is important to get the balance right”.

“For small businesses and consumers to get the best deal, we must be able to compete against global corporates and grow businesses in Australia that are at a global scale and competitive in taking on the global giants,” Mr McKellar said.

“Mergers are healthy and have a significant benefit, so we have to be careful about tying them in red tape,” he said.

The Treasurer on Wednesday morning defended the proposed changes, saying “by fixing the mergers regime, we make our economy more competitive”.

“If it’s more competitive, it’s more dynamic and it’s more productive and it’s better for consumers and businesses alike,” the Treasurer said.

“Most mergers are good. Most mergers are about scale. 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.

“These reforms will mean 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.”

But Greens senator Nick McKim slammed the merger reforms, accusing Labor of caving in to corporate interests by not putting the onus of proof on businesses to prove that the acquisition was not anti-competitive.

“This reform will not give the ACCC the tools they need – and have asked for – to stop further concentration of market power,” Senator McKim said.

“This is Labor yet again failing to take the necessary steps to tackle the market dominance which is allowing the supermarket duopoly to gouge prices,” he said.