CFA Supports Reforms to Merger Approvals

report, expenses management, cost deduction-3050965.jpg

The Consumers Federation of Australia (CFA) and CHOICE have provided a submission to the newly newly established Competition Taskforce on merger approvals. 

Australia has many markets that are highly concentrated; supermarkets, airlines, banking, telecommunications, energy and insurance are all markets where a few dominant companies provide most Australians with essential products and services. Increasingly, we are also seeing the emergence of new highly concentrated markets in the digital economy, such as social media and online search services.

Consumers pay the price of highly concentrated markets, including through higher prices, poor customer service and lower product and service quality. There is also evidence that businesses in concentrated markets infringe consumer protections more often. Effective merger control should help stop companies in already concentrated markets growing bigger and more powerful in ways that harm consumers. It should also prevent the emergence of new highly concentrated markets with poor consumer outcomes.

Preventing these mergers is important because addressing consumer harms after a market has become highly concentrated can be complex, often requiring further more specific regulation outside of competition policy. Notably, consumer advocates have been vocal about problems for consumers in many of the markets noted above, and market-specific regulation has been necessary as poor consumer outcomes arose.

In the submission, CHOICE and the CFA support the ACCC’s proposed changes to Australia’s merger control regime. In addition, we urge the Competition Taskforce to recommend the Federal Government implement reforms to:

1. Ensure consumer advocates are notified of potential mergers that may harm consumers and are invited to provide evidence;

2. Enable consumer advocates to access funding required to participate throughout the merger control processes, noting that engaging with Australian Competition Tribunal (Tribunal) or Court-based processes can be particularly resource intensive; and

3.Eensure the merger control test(s) enables consideration of evidence about the effect of the merger decision on consumers experiencing disadvantage or vulnerability.