Chalmers’ merger shake-up slams brakes on supermarket takeovers

Every plan by a supermarket to take over part of the operation of another will face scrutiny from the competition regulator under federal government plans to deliver the biggest overhaul to merger laws in half a century.

Treasurer Jim Chalmers will on Thursday introduce legislation to streamline key aspects of the merger system but also tighten it so that more acquisitions are investigated to ensure they do not reduce competition.

Treasurer Jim Chalmers will unveil new merger laws on Thursday, with the supermarket sector a key area of concern.Credit: Andrew Quilty

The government has ramped up its attacks on the supermarket sector after the Australian Competition and Consumer Commission (ACCC) started action against Coles and Woolworths alleging the companies misled shoppers with their “Down Down” and “Prices Dropped” campaigns.

Chalmers will argue the merger reforms will boost competition and productivity across the economy, delivering benefits direct to consumers and businesses.

He said while not every merger would be captured under the government’s new system, the supermarket sector would be.

“We want to make sure supermarket mergers don’t come at the cost of Australians, families and pensioners getting a fair price on their grocery bills,” he will tell parliament.

A set of thresholds will be introduced, above which companies will have to tell the ACCC of their intention to merge, which will be reported on a public register.

The ACCC will investigate any merger involving a large business with a turnover of more than $500 million buying a smaller business or assets with domestic turnover of more than $10 million.

Any merger involving an Australian company with turnover across all its operations of more than $200 million, and either a business or assets of more than $50 million, or a global transaction value above $250 million, will also be reviewed.

Serial acquisitions, which on their own may not come under the purview of the competition regulator, will also come under scrutiny.

Australia is one of only three nations that does not yet require compulsory notification of mergers.

Chalmers will also confirm the ACCC will have to work through mergers faster after criticism from the business sector it takes too long to make a determination.

It will have 30 working days to approve mergers where there is no threat to competition. Reviews of ACCC decisions will be conducted by the Competition Tribunal made up of a federal court judge, an economist and a business leader.

While Chalmers will acknowledge that most mergers have genuine economic benefits, “some mergers can cause serious economic harm. This can happen when businesses are not interested in improving profitability by lifting productivity”.

The new merger laws are slated to apply voluntarily from July 1 next year, with formal application from the start of 2026.

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