Steps can be taken to improve Australia’s merger laws, however wholesale changes risk unnecessary economic damage and would reduce Australia’s attractiveness as a place to invest and innovate, according to the Business Council.
The BCA’s submission to the Australian Government Competition Taskforce’s Merger reform consultation says improvements to Australia’s merger regime can be made within the existing framework.
BCA Chief Executive Bran Black said mergers shouldn’t be viewed as a bad thing and he agreed with Assistant Minister Andrew Leigh that they can enhance competition.
“Mergers are overwhelmingly not anticompetitive, and this is reflected in the ACCC’s own statistics showing around 93 per cent of mergers that are considered by the regulator are cleared at pre-assessment,” Mr Black said.
“Australia’s current laws have served the community well, and are well-understood, low cost, flexible and appropriate given the vast majority of mergers do not raise competition issues.
“Reshaping the merger test and reversing the onus of proof by creating a ‘satisfaction’ standard would put Australia out of step with overseas jurisdictions, including the US and Canada, effectively treat all mergers as presumptively harmful, and reduce Australia’s attractiveness as a place to invest and innovate.”
Mr Black said the Business Council recognises that amending merger laws to mandate certain mergers be notified to the ACCC can better assist the regulator to undertake its role.
“The BCA does not oppose the introduction of a well-calibrated and evidence-based mandatory notification system for certain mergers, however, it will be essential that there is a robust consultation process if Government pursues these types of changes, including settings such as the notification threshold, so they can be properly considered.”
“It’s also critical that the Federal Court’s role, as per the current judicial enforcement model, is retained.
“This model enables the ACCC’s conclusions to be tested, to a legal standard which is appropriate given the gravity of intervening in the legal right of Australian companies to transact freely. Assessing the competitive effects of a merger is a complex and contested matter. It should not be left to regulatory discretion.”
The Productivity Commission’s recent analysis of industry concentration highlighted that there are limited areas where concentration has increased since 2006 and that, in any event, concentration is not necessarily an indicator of weak competition or poor consumer outcomes.
Mr Black said any changes to the current system must deliver economy-wide benefits.
“Increased competition is an important objective, but of equal importance must be our competitiveness as an international investment destination.
“Australia is in the grip of an investment drought and our economy is under significant pressure, and so the Government must carefully weigh any proposed changes to merger laws with the likely impact on business, Australian jobs and our ability to compete.”
Read our full submission here.
