Actually the headline to the Australian story is:
But I think my headline is more accurate.
I am amazed by how little business people know about our competition laws, and our merger laws in particular. And I am astounded by how this ignorance doesn’t stop business people making comments about the law. For example,
Some of the nation’s most senior investment bankers have warned the competition regulator against taking an overzealous approach to enforcing competition laws, claiming it could prevent significant economic benefits from corporate deals flowing to consumers.
Sorry? No! Unlike most jurisdictions around the world, the Australian Competition and Consumer Act allows companies to seek authorisation – a process that exactly covers this situation. So if a merger would ‘substantially lessen competition’, and so be illegal under the standard law, the merger parties can seek to have the merger authorised. To do this they need to show that the ‘benefits to the public’ from the merger outweigh the detriment. While there is some debate about the breadth of the term ‘public’, precedent in Australia basically means that this is a cost-benefit analysis. So if merger parties can show that their merger passes a cost-benefit test despite ‘lessening competition’ they can get it approved. Further they do not even have to go to the ACCC for this. Merger authorisations are handled by the Australian Competition Tribunal.
So the claim that:
… the ACCC, I think, has run an almost zealous pursuit of the competitive issue without taking into account the economic benefits of the combination.
simply means that the relevant companies have got stupid lawyers who have used the wrong bit of the law to get merger clearance. But authorisation is a transparent public process. And it looks like merger parties don’t like transparency. So the last merger authorisation application was about 8 years ago, when I was mergers commissioner at the ACCC.
Or how about:
So people complain to improve their own competitive position. That was very clear in Foxtel-Austar . . . You need a very strong regulator . . . that is really smart, and one that needs a lot more outside help than it gets today in particular sectors to really understand the issues and to ensure they are not regulating just to make somebody else stronger.
Well, if a company is worried that competitors are making false claims in confidential submissions to the ACCC – and that the ACCC is incorrectly believing them – then they have a number of simple choices. First, they can appeal to the Courts. If the ACCC has based its case on false claims then its case will quickly fall apart.
Can’t wait for an appeal? Well, then use the formal clearance process in the Act. This is a public process that allows competitors’ claims, and the claims of the merger parties, to be publicly debated and evaluated. Interestingly, since this process was introduced, due to exactly the sort of claims made by the banks, there have been ZERO formal merger applications. It appears merger parties may like public scrutiny of competitors’ claims, but not if this means they also face public scrutiny.
The ACCC’s informal merger clearance processes are far from perfect. But it is silly for the banks and other private companies to complain about these processes when the solutions to their problems already exist – but the business community refuses to use them.