Australia’s competition watchdog the ACCC has banded with the UK’s Competition and Markets Authority and Germany’s Bundeskartellamt in an effort to control mergers within the technology industry.
“Companies have a clear incentive to merge with or acquire their competitors to increase their market power and raise prices,” ACCC Chair Rod Sims said. “This is why effective merger control is so important, and why some mergers must be blocked by competition authorities.
“We know that once market power is gained from a merger, it is very difficult to restore competition with our other competition enforcement tools, making it crucial for us to use merger control more effectively,” Sims continues.
“The focus of competition agencies, courts and tribunals must be on the importance of protecting competition and preventing anticompetitive mergers, otherwise there is a risk that merger control instead skews towards merger clearance and so damages our economy.”
The three organisations have also released a joint statement, outlining their reasoning.
“Without strong merger control regimes, there is a risk that mergers will proceed that lessen the level of competition by weakening competitive constraints and in some cases strengthening dominant positions,” the statement reads in part.
“An effective regime therefore seeks to prevent companies from gaining market power through acquisitions. Firms are typically motivated to use gains in market power to increase shareholder returns at the expense of consumers.
“Given the long-term structural effects of mergers, ineffective merger control that does not properly scrutinise mergers can cause long-term negative consequences for businesses and end consumers. It can be very difficult, and in some cases impossible, to reverse the loss of competition by taking enforcement action after a merger has taken place. Equally, it can take considerable time for markets to adjust to recover the competition lost through a merger.”
