Competition taskforce to tackle merger rules

A Treasury-led task force will consider whether a more muscular competition watchdog should be able to prevent anti-competitive mergers before they happen.

Assistant Treasurer Andrew Leigh said there was a lack of competition across markets, from beer to baby food. Picture: NCA Newswire / Gaye Gerard

A Treasury-led taskforce will consider whether a more muscular competition watchdog could prevent anti-competitive mergers before they happen.

Jim Chalmers on Wednesday announced a rolling two-year review into competition policy as part of a wider reform agenda aimed at rekindling the dynamism of the Australian economy following decades of deteriorating productivity.

“In order to own the future, we need to make our economy more productive, more dynamic, and more competitive,” the Treasurer said.

“The review will look at competition laws, policies and institutions to ensure they remain fit for purpose, with a focus on reforms that would increase productivity, reduce the cost of living and boost wages.”

Former Australian Competition & Consumer Commission chairman Rod Sims and Grattan Institute chief executive Danielle Wood will form part of an expert advisory panel, he said.

Thursday’s Intergenerational Report will highlight the hit to the nation’s long-term prosperity from a slowdown in productivity growth, which will also make it harder to pay for the needs of a rapidly ageing society.

Assistant Treasurer Andrew Leigh, who will oversee the taskforce alongside Dr Chalmers, told The Australian the dominance of only a few big players across a range of industries risked depressing innovation and competition, to the detriment of productivity and consumers. “There are too many Australian markets where consumers feel they are choosing from a duopoly. From banking, to baby food, to beer, these are heavily concentrated markets, and we want to make sure that the problem doesn’t become worse,” Dr Leigh said.

“We’ve seen an increase in mark-ups. We’ve seen a fall in the share of Australians that switch jobs and get the benefits in higher earnings. We’ve seen a decline too in the (company) start-up rate. All of this suggests the economy may have become less dynamic. And that indeed may be a reason why, as Jim has just pointed out, the last decade was the lousiest decade of productivity growth that we’ve measured in the post-war era.”

Dr Leigh said the taskforce would consider ACCC chairwoman Gina Cass-Gottlieb’s call to give the regulator more powers to block acquisitions before they took place, a proposal backed by Dr Sims.

The taskforce will also look at the proliferation of non-compete clauses in employment contracts. “Research has found that one in five workers have these clauses, which could have impeded people from moving to a better job. And it’s not just tech moguls (who have these clauses), it’s even early childcare workers, and it could be one reason for sluggish wages growth over recent years,” Dr Leigh said.

He said another priority would be “getting plenty of competition in the renewables market”. “As the electricity grid is updated, we need to make sure it still provides plenty of competition. And in the EV (electric vehicle) market, we need to see plenty of competition between vehicles there.”

The taskforce will also look at how to better co-ordinate reform with states and territories, to be progressed through the Council on Federal Financial Relations.