Ex post review of ACCC merger decisions
The ACCC has released a report reviewing six mergers that were not opposed by the ACCC between 2017 and 2019.
The ACCC observes that the findings were mixed and highlight some of the ‘weaknesses in the current informal clearance regime’ regarding information provided by parties to the ACCC.
The introduction to the report lists the following ‘key takeaways’:
Confirmation that the removal of a vigorous and effective competitor can have a significant impact on competition, even where the merger results in a relatively minor increase in market concentration, and even where there are other vigorous and effective competitors remaining in a market. This emphasises the importance of the ACCC looking beyond market shares and at other market conditions that may heighten the risk that a merger will impact competition.
The need to be skeptical as to whether the benefit of competitive constraints on a particular segment will be carried over to other segments. We have identified instances of successful price discrimination post-merger, such that competitive constraints which were relevant to a segment of customers, did not constrain the merged entity from imposing significant price increases on other customers.
The likelihood of new entry and expansion, and the ability of third parties to exercise countervailing power, are both routinely over-estimated by merger parties and third parties. This supports the need for greater scrutiny of such claims and caution to be exercised where competitive constraints on a merger largely rely on new entry or by customers exercising countervailing power.
There are instances where merger parties and third parties have distorted or omitted critical information relevant to the ACCC’s analysis. This highlights the weaknesses in the current informal clearance regime, including where merger parties decide what information they provide to the ACCC upfront and during the review.
The report also indicates that the ACCC will ‘publish future learnings’ as further trends and insights from ex post reviews are identified.