Australia has unveiled ambitious plans to fortify its corporate merger regulations, responding to mounting concerns from both regulators and the public regarding market concentration and its adverse effects on competition within critical sectors. The proposed reforms aim to bolster Australia’s merger approval process, with the federal government proposing to grant additional authority to the competition watchdog to scrutinize mergers surpassing specified value and market-share thresholds.
Scheduled to take effect in early 2026, these proposed changes are being introduced against a backdrop of escalating worries about the role of companies’ pricing power in driving inflation beyond the Reserve Bank of Australia’s target range of 2%-3%. To address these concerns, top executives from Australia’s major supermarket chains are expected to testify before a parliamentary panel next week, where they will be questioned about whether food retailers have exploited broader inflationary trends to enhance their profits.
Emphasizing the significance of competition, Australia’s treasurer, Jim Chalmers, underscored its role in providing consumers with increased choices, superior quality products, and fairer prices. He highlighted its role in fostering innovation and productivity within businesses, thereby contributing to overall economic growth.
Presently, companies are not obligated to notify the Australian Competition and Consumer Commission (ACCC) of impending acquisitions or await clearance before proceeding. However, the proposed reforms seek to align Australia’s merger regulations with global standards by empowering the ACCC to scrutinize small serial acquisitions that could gradually erode competition over time.
According to Gina Cass-Gottlieb, the chair of the ACCC, robust merger laws are imperative to thwart anti-competitive mergers that could result in elevated prices, diminished consumer choice, and stifled innovation.
Chalmers outlined the fragmented nature of existing merger regulations and outlined plans to empower the ACCC to evaluate whether proposed mergers significantly diminish competition and bolster market power.
It’s noteworthy that the ACCC recently failed to prevent ANZ, Australia’s fourth-largest bank, from acquiring insurer Suncorp’s banking business. However, under the proposed framework, all ACCC determinations will be subject to review by the Australian Competition Tribunal.
Looking ahead, the government will engage in consultations to establish thresholds for automatic ACCC scrutiny, aiming to streamline and expedite the merger process while providing the regulator with robust oversight to identify transactions posing risks to competition, consumers, and the economy.