Changes to merger laws are among the major reforms needed to improve the nation’s productivity and prosperity, according to outgoing Australian Competition and Consumer Commission chair Rod Sims.
Addressing the National Press Club on Wednesday, Mr Sims reiterated his repeated calls for merger law reform to address Australia’s market concentration.
“In my view, and the view of many others, the Australian economy suffers from high levels of market concentration to the detriment of consumers, small business and productivity,” he said.
“The most important tool to prevent this is our merger laws and they are not up to the task.”
Mr Sims said that the current lack of a merger approval system in Australia was “almost unique” and forced the ACCC to go up against “the so-called real-world evidence of the necessarily self-interested merger parties” when matters reach court.
Along with the introduction of a formal merger approval system, the ACCC has also proposed blocking firms with substantial market power from making acquisitions that would significantly increase, extend or entrench their market power.
“Australia is currently facing supply and logistic challenges. I think these are made worse by our market concentration in so many areas and by our infrastructure bottlenecks,” said Mr Sims.
“We need to address this through competition law, to prevent anti-competitive abuses of market power, and through general infrastructure reform.”
On financial services, Mr Sims said there were “so many challenges” but specifically drew attention to the issues of debanking, the role of digital platforms in a mostly cashless world and the pricing of mortgages.
Mr Sims said that reform in these areas and across other areas such as unfair trading practices, infrastructure, energy and privacy were required.
“Right now, as I have said repeatedly, our governments must focus on the pandemic. Only once it settles can our economy function properly,” said Mr Sims.
“When COVID is under control, I am convinced that important and early movement on the above issues and challenges will do much to improve our economic prosperity and, possibly more important, to improve faith in our market economy.”
However, Mr Sims noted that the ACCC’s proposed reforms would continue to face opposition from big business.
“Large established businesses and their advisers will oppose these changes, but my guess is that well over 90 per cent of Australians would support them,” he said.
“Further, I think such changes would strengthen our market economy, and would benefit the vast majority of Australian businesses.”
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
