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ACCC chair warns Australian economy is under threat from competition issues

The health of the Australian economy is under threat unless the government looks at addressing competition issues, said Australian Competition and Consumer Commission chair Rod Sims.

by | 17 Oct, 2021

ACCC chair warns Australian economy is under threat from competition issues

Mr Sims said there were three main competition issues that needed to be addressed: merger law reform, the need to prove the future in competition cases, and the role of new regulation for digital platforms. He said innovation, productivity and the welfare of Australians depend on there being an adequate level of competition.

“Merger control is critical to protecting and promoting competition. It is the gatekeeper, protecting us from the negative effects of increases in concentration,” Mr Sims said.

“If we are serious about protecting competition in this country, we must ensure our merger control regime works as effectively as possible, and that it is consistent with international best practice.”

Mr Sims also pointed to the issues caused by the ACCC’s need to prove the likely future state of competition in merger cases and cases involving anticompetitive conduct.

“The fundamental issue is that when applying our ‘substantial lessening of competition’ test in merger cases and other competition cases, the approach taken by the courts currently requires the ACCC to prove what is likely to happen in the future, rather than considering the overall interference to the competitive process which will be caused by the acquisition of a key player by its closest competitor or by other anti-competitive behaviour,” Mr Sims said.

The problem with the existing legal test is that it is being confined to what is currently known and provable about future developments, he said.

Mr Sims also outlined certain challenges the ACCC faces when reviewing merger cases on a day-to-day basis.

“Increasingly we are having difficulty getting the information we need to conduct our merger assessments. We are also put under inappropriate time pressure, and we face threats to complete. We are also hearing of more mergers only shortly before they are to complete,” Mr Sims said.

“Indeed, ACCC Commissioners observe that the approach of companies to Australia’s merger processes is sometimes contemptuous.

“Around the world, there is growing recognition among relevant authorities that existing anti-trust laws have not held up well to the challenges posed by digital markets.”

The ACCC will consider the need for sector-specific regulation to address the competition and consumer concerns in digital platform markets as part of the five-year digital platform services inquiry.

“Our advice will be provided in a report of the Digital Platform Services Inquiry which is due to the Treasurer in September 2022. Importantly, we will seek industry views on this crucial question, and we will liaise closely with the Commonwealth Treasury,” Mr Sims said.

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