New inquiry into harm from capital concentration to consumers, competition

The House of Representatives Standing Committee on Economics is commencing a new inquiry into the implications of capital concentration and common ownership in Australia.

Committee Chair, Tim Wilson MP, said ‘This inquiry is urgent – there is already high concentration of ownership of ASX listed companies by an increasingly small number of ‘mega funds’ and that trajectory will increase’.

‘The House Economics Committee has been asking regulators about these risks for nearly a year. Recently the Chair of the ACCC informed the Committee common ownership posed threats to competition when it hits 10 per cent, yet some have already hit 30 per cent’.

‘We don’t want a stock exchange where a hand full of ‘mega funds’ make all the decisions, and ordinary investors are locked out and higher costs are paid by Australians. Some ‘mega funds’ have already said that has their ownership increases they’d de-list public companies’.

‘Common ownership’s flow-on risks higher prices and collusion, corporates imposing public policy agendas while bypassing democracy, and disempowering ordinary investors. The law shouldn’t empower capital over citizens and that’s what we’ll be inquiring into’.

Common ownership refers to when a fund or collaborative funds simultaneously own shares in competing firms. The Committee will investigate the impact of common ownership by institutional investors (e.g. banks, super funds, investment funds, hedge funds, etc.).

‘This inquiry will shine a bright light ‘under the hood’ of the ownership of the ASX today, and ensure that we update the law, regulations and regulators to address the challenges of the future so we empower citizens, not organised capital’, Mr Wilson said.

The committee invites submissions from stakeholders and interested parties. The full terms of reference are available on the committee’s website.

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