Australia has long been a land of oligopolies – industries dominated by a few companies. From banking, to airlines, to supermarkets, to insurers, you can often count the number of major players on one hand. Nothing new there, you say? Well, this week the government unveiled a response of sorts – but it’s not the populist answer of breaking up the corporate giants.that should make it easier for the competition watchdog to block anticompetitive mergers.
Previous work from Treasury has also shown it’s overwhelmingly bigger companies who are making the acquisitions. Says Assistant Minister for Competition Andrew Leigh: “Half of all mergers involve a firm that is in the biggest 1 per cent of firms. So there are a significant number of mergers which don’t involve a couple of minnows getting together to take on the whale, but involve the whale snapping up the minnow.
That’s actually a significant development. Under the current laws, if the ACCC doesn’t like a deal it has to make its case in court, putting the onus on the regulator to prove that the merger that hasn’t happened yet will result in a substantial lessening of competition. The watchdog has had some well-known losses in court, where it’s struggled to counter evidence from executives who swear competition won’t be harmed by the deal they’re planning.
A general suspicion there’s not enough competition sits behind much of the recent political backlash against big business and the accusations of gouging.
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