Market regulator Rod Sims has called for a major overhaul of laws covering mergers and takeovers, saying Australian rules do not meet international standards and consumers are losing out through higher prices due to a lack of competition.
In a speech to lawyers on Friday morning, Sims also said the Australian Competition and Consumer Commission, which he chairs, also plans to introduce special rules covering takeovers by tech multinationals that might otherwise not raise concerns.
That was because of the vast market power already enjoyed by tech companies including Google and Facebook, he said.
Sims said he wanted to start a debate over his proposals, which would hand much more power to the ACCC and reduce the importance of the courts.
He is likely to meet stiff opposition from big business and its advisers, who have been able to push through a series of mergers in recent years despite the ACCC’s objections.
Under the current system, companies that want to merge with or take over another company do not have to tell the ACCC, and the regulator’s challenges generally fail in court because it is required to prove that the merger would be likely to substantially lessen competition, which Sims said was close to impossible.
Under laws that have been in place since 1993 the regulator has lost seven cases and won none.
Sims proposes changing the law so that companies wanting to merge have to formally notify the ACCC and seek its approval, as well as lowering the bar the regulator has to overcome in court to block a deal.
He said mobile phone prices had risen since the merger of TPG and Vodafone in February last year, which was approved by the federal court despite the ACCC’s objections.
Sims also said people in Queensland who rely on freight delivered by rail were also paying more after the federal court in May allowed another deal the ACCC opposed, the purchase by Pacific National of a rail terminal.
“You look at the process, and it’s geared to approving and clearing mergers, it’s not putting them under reasonable scrutiny,” Sims told Guardian Australia.
“If we aren’t putting them under sufficient security, we’ve got a problem.”
He said the new rules would help address the “creeping dominance” enjoyed over the years by the likes of big supermarket players Coles and Woolworths.
“The current laws can’t do that,” he said.
He said small businesses would also benefit from his proposed changes.
“If you’re running a small business or you’re a farmer, you’re usually buying your inputs off a small number of companies, and you’re usually selling your outputs to companies with a lot of market power, and obviously Coles and Woolworths is the classic example,” he said.
He said tech companies needed a special regime of ACCC oversight, which the regulator would put forward to the government next year.
One example was the takeover of Fitbit by Google, which went ahead despite ACCC concerns.
“Google has an enormous amount of data, just an enormous amount,” Sims said.
“Fitbit has a concentrated statistically significant collection of health data. Adding one to the other puts Google in a very strong position to dominate markets that benefit from having the best health data.”
He said his proposed changes would also give the ACCC more power to stop international mergers before they happen, rather than having to go to court to seek injunctions or penalties after the fact, as happens now.
This would be done in a way “consistent with what’s happening in many countries overseas”, he said.
“We want to try and align as much as possible with what’s happening overseas so that the Australian regime is not out of kilter.”
Sims said he would not formally put the bulk of his proposed reforms to the government for consideration until the coronavirus crisis had passed.
