Competition case for merger shake up is unconvincing

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Giving the ACCC bureaucrats more power might just add more red tape costs for little return. It would be more productive to focus on the obvious competition black spots.

has rejected the “presumptive ban” demanded by the Australian Competition and Consumer Commission that would have reversed the onus of proof by requiring companies to prove that tie-ups would be unlikely to substantially lessen competition.

Dr Chalmers draws on industry microdata analysis by researchers including the e61 Institute to point to increased concentration in various industries, increased price mark-ups and a reduced rate of business start-ups and exits. In any case, does anyone really think the Australian economy is less exposed to competition than 20 years ago as digitisation has extended supply chains around the globe?

The tension here is with what Dr Chalmers recognises as the fact that “most mergers aren’t bad” and are “an important feature of any healthy, open economy”. Mergers are a form of competition for corporate control over who can make the most efficient use of capital. Time will tell if giving themore power to regulate this competition will just add more red tape costs for little return.

 

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