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Australia is set to overhaul its merger regime and increase scrutiny of takeovers that the government fears could reduce competition.
The move comes as politicians and regulators are focusing their attention on the country’s largest businesses in markets including retail, travel and banking, sectors largely dominated by a handful of companies.
The pressure has been most keenly felt in the supermarket sector, where some high-profile MPs have called for a potential break-up of the largest groups and the government is set to introduce new penalties on retailers that are found to have been acting anti-competitively with regard to pricing and the treatment of suppliers.
Jim Chalmers, Australia’s treasurer, said that the overhaul of merger rules was necessary as the economy is “not competitive enough as it stands”.
He described the regulatory process for approving mergers as “hit and miss”, with the Australian Competition and Consumer Commission only scrutinising a portion of takeovers each year.
There were 1,400 mergers in Australia last year, according to Chalmers, with a combined value of about A$300bn (US$200bn), but the regulator only scrutinises 330 on average a year. The proposed reforms include plans to speed up the merger process but also to introduce laws that require those above certain market thresholds, such as market share, to be notified to and passed by the ACCC.
The reform is designed to better equip the regulator to monitor deals that could have an impact on consumers and extend or entrench market power, Chalmers said. So-called serial acquisitions — in which a company rolls up smaller players over a period of time to the detriment of competition — will also be a focus of the revamped laws.
The Labor government led by Prime Minister Anthony Albanese has clashed with business in recent months over union-friendly industrial relations reforms and its review of the supermarket sector.
Chalmers said that while most mergers brought economic benefits, better and more transparent rules were needed to stop deals that squeezed out competitors. The new laws, which will come into force in 2026, were welcomed by the regulator.
“Higher prices, less choice and less innovation can result from weakened competition,” Gina Cass-Gottlieb, chair of the ACCC, said in a statement. “Stronger merger laws are critical to ensure anti-competitive mergers do not proceed.”
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