Tougher merger laws will boost competition and improve performance and productivity
This is because a market economy, based on companies and individuals pursuing their own interests, only works if those companies and individuals face sufficient competition.
- This is because a market economy, based on companies and individuals pursuing their own interests, only works if those companies and individuals face sufficient competition.
- If Treasury and the Reserve Bank are now doing analysis, this indicates they clearly understand Australia’s competition problem.
- The increased competition that will result will drive better performance and so productivity.
What’s in the reforms?
- And the ACCC should decide if a merger will substantially lessen competition.
- These are economic judgements that are poorly suited to first instance decision making by a court.
- Third, and also hugely important, the reforms mean a merger cannot proceed if it creates, strengthens or entrenches substantial market power.
- They have wanted proof it will be used in ways that reflect inadequate competition, even though the merger has not happened yet.
- It recognises that substantial market power should be prevented, and certainly not strengthened or entrenched.
- The latest merger that triggered the investigation can be stopped, as presumably will be others that may have followed.
What’s not yet in the reforms?
- The treasurer has, however, indicated the thresholds will be set to capture the number of merger assessments the ACCC does now.
- The ACCC’s approach to this was to be able to “call in” problematic mergers below the thresholds, but the treasurer has rejected this idea.
- This suggests the thresholds should be set at a lower level than seems to be envisaged.
- They reflect a healthy approach to increased competition in our economy which will benefit consumers, most businesses, and the wider economy.
Professor Rod Sims is an expert adviser to the Commonwealth Treasury’s Competition Task Force. He was Chair of the ACCC from 2011-2022.