‘More competition, not less’: Government targets merger reforms

Chalmers acknowledged that while there are many economic benefits to mergers, some can cause “serious economic harm”, pointing to businesses “solely focused on squeezing out competitors to ensure a bigger percentage of the market.”

“This can strangle innovation, it can reduce productivity in our economy, and it can punish consumers with reduced choice,” Chalmers said.

He stated that Australia’s competitiveness has been declining since the early 2000s, while market concentration has nearly doubled since 2010.  He added that Australia’s current approach to mergers is “no longer fit for purpose”.

Currently, Australian companies are not required to notify the ACCC about mergers or wait for approval before proceeding.  Australia is one of only three OECD nations that do not require compulsory notification of mergers. The US, Canada and the European Union all have mandatory notification regimes.

The reforms will introduce mandatory notification for deals that exceed yet-to-be-determined thresholds and prohibit mergers from going through without approval from the ACCC.

“We need more competition, not less, if we want more competitive and more dynamic businesses, and modern competition policy is absolutely central to how we get there,” Chalmers said.

ACCC Chair Gina Cass-Gottlieb welcomed the Treasurer’s announcement that the government will move to strengthen Australia’s merger laws, which she said “will benefit Australian consumers and businesses of all sizes, as well as the wider economy”.

“Higher prices, less choice and less innovation can result from weakened competition. Stronger merger laws are critical to ensure anti-competitive mergers do not proceed,” Cass-Gottlieb said.

The head of the consumer watchdog  emphasised the significance of the proposed changes, stating they will bolster public trust in Australia’s competition framework.

The ACCC further welcomed the government’s plan to address “serial acquisitions,” where a series of smaller deals cumulatively harm competition.

Chalmers believes the reforms are an important step in the government’s commitment to a strong economy that benefits consumers, businesses, and industry.

The news follows former Trade Minister Craig Emerson’s report on changes to the Food and Grocery code released earlier this week, which called for the code to become mandatory and apply to all supermarkets with annual revenues of more than $5 billion. This would cover Coles, Woolworths, ALDI, and wholesaler Metcash.

The report also recommends the code “be strengthened to better protect suppliers, with new protections against retribution, since suppliers’ fear of retribution compromises the code’s effectiveness”.

In his address at the Annual Bannerman Lecture, Chalmers said the report’s recommendation that  the code be made mandatory was “appealing” to the government.

“We’ve empowered the ACCC to undertake valuable work on supermarkets, aviation, early childhood education and retail,” Chalmers said.

“We want a more competitive sector that delivers a fair go for farmers and families. So we ask the ACCC to focus on how we make that sector work better for customers and for suppliers.”

The new merger laws are set to come into force on 1 January 2026, subject to the passage of legislation through the Australian Parliament.

A complete guide to the government’s merger reforms can be found here.

Image credit: jimchalmers.org