ACCC Wants More Power Over Mergers After TPG Defeat
Following its failure to scuttle the TPG-Vodafone merger last year, the ACCC is seeking a major overhaul of the merger process, which would require the watchdog’s approval for all mergers above a certain size and make companies responsible for proving that deals would not substantially reduce competition.
ACCC Chair Rod Sims, in a speech before the Law Council this morning, outlined proposals for a new unified formal merger review process, saying that current rules are “not fit for purpose”, are skewed towards clearance, and fall behind international standards.
One major change Sims is gunning for is to shift the onus of proof in big acquisitions from the ACCC – which currently has to prove that a deal would substantially reduce competition – to the companies, to prove that they would not. He told the Law Council that it can be “very challenging” for the ACCC to obtain such proof under the current regime.
“The ACCC often finds that parties likely to be adversely affected by the merger, such as suppliers and customers, are extremely reluctant to provide evidence because of concerns about future retribution and confidentiality.
“Contrary to the views I have heard from some, this does not demonstrate they are unconcerned about the merger; such a view is commercially naïve,” he said.
Sims also pointed the finger at big tech companies like Apple, Google, Microsoft, Amazon, and Facebook, labelling them “serial acquirers” and pointing out that between them, they acquired almost 500 businesses – almost four per month – over the 10 years from 2010 to 2020.
“It is beyond debate that acquisitions have taken place that have contributed significantly to the substantial market power of the digital platforms. With the benefit of hindsight, they should not have been allowed to proceed.
“We are not alone in saying this. There is broad recognition amongst regulators internationally that, given the critical role the large platforms perform in the economy and their growing eco-systems, acquisitions by such businesses requires a different level of scrutiny,” he said.
Sims called on Treasury and Government to progress merger reform, saying it was vital to restore and maintain effective competition.
“This is a vital debate for the future of Australia and our economy. We depend on competition for the effective working of our economy,” he said.
The speech comes a year and a half after the Federal Court allowed TPG and Vodafone to merge despite furious ACCC opposition; Sims said today that the resulting deal had “extinguished” the chance for a fourth operator to enter the market and challenge the big three telcos.