The ACCC says there needs to be greater recognition of the economic costs of allowing anti-competitive mergers, ACCC Chair Rod Sims said today.
Mr Sims was speaking about consumer welfare at the RBB Economics Forum and the emerging challenges for policymakers and regulators to improve economic efficiency across a range of areas including mergers, unfair conduct, monopolies, agriculture and the data economy.
“The objective of merger law is to prevent anti-competitive acquisitions before they occur; that is, before the harm occurs. It is about protecting competition and the competitive process, and in that way protecting consumers,” Mr Sims said.
“Significant increases of concentration in already highly concentrated markets create significant competition risks.”
“We have noted options to improve merger outcomes that have been used overseas range from changing the onus or introducing structural presumptions about certain mergers through to considerations of a more formal regime.”
Mr Sims also spoke about the importance of enforcement in increasing the effectiveness of consumer laws.
“Markets only work when participants are well informed. If consumers are misled or deceived they will likely make inappropriate decisions and be worse off as a result,” Mr Sims said.
Mr Sims also spoke about a growing number of concerns in relation to unfair conduct.
“Survival of the fittest means go hard and compete on your merits. It shouldn’t, however, mean do whatever you like to those in a weaker position. This is a crucial point.”
“There is a strong argument that we need to protect our market economy from its own excesses,” Mr Sims said.
“Having a law that deals with firms that cause substantial detriment to consumers or small businesses by conduct that, for example, is not reasonably necessary to protect their own interests, seems a change whose time has come,” Mr Sims said
He also spoke about the dangers of a lack of appropriate regulation to curb monopoly pricing, particularly when bottleneck infrastructure is in the hands of a company with unfettered market power.
In the case of the Port of Newcastle, for example, Mr Sims said, monopoly pricing will deter investments in mining activity.
“Monopoly pricing damages the productivity of Australia’s economy, impedes growth, and our international competitiveness,” Mr Sims said.
Mr Sims went on to discuss the economic consequences of a lack of price transparency afforded to our farmers and their lack of bargaining power.
“Farmers are often forced to bear risks they either cannot control or are not best placed to control.”
“Also a lack of price transparency and dispute resolution can make production and planning decisions more difficult and risky than they should be, which damages Australia’s productivity.”
Mr Sims said the concentration of large volumes of personal data in the hands of a few companies can distort Australia’s market for data and had implications for competition, innovation and investment.
“Consumers have few choices about their data being collected, and little understanding of how it is being used, given the agreements they need to sign to use the platforms are often vague, long and complex.”
He asked “How much is the lack of information and choice distorting the operation of markets for data allocation and use? What are the economic consequences of this?”