Joint statement

“Competition can only be maintained by ensuring anticompetitive mergers do not happen. This is even more so in a fast-developing digital world impacted by the Coronavirus (Covid-19) pandemic,” the statement said.

“We believe that in the world today there is a real need for strong merger enforcement from competition agencies globally to ensure that high concentration levels do not become the accepted norm, and to maintain and promote competition for the benefit of consumers.”

Merger controls are the “first line of defence”, the three regulators continued, noting that competition agencies can do very little to retrospectively unwind market dominance once it is established.

The focus from the ACCC, CMA and Bundeskartellamt does not mean that all mergers will raise concerns, the statement noted, but they will all “require careful scrutiny”, the statement noted. Preventing anticompetitive mergers, it surmised, must be the priority for regulators, courts and tribunals.

“Uncertainty should not be a reason for clearing a merger when economic principles point to the potential harm to competition and consumers. Otherwise, there is a risk that merger control instead skews towards merger clearance.” This, the joint statement deduced, would not be a good outcome for consumers or the economy.

Australia’s position

VIEW ALL

ACCC chair Rod Sims (pictured) said he was “delighted” to make the statement in conjunction with his counterparts at CMA and Bundeskartellamt.

“We all recognise that competition is fundamental to the success of a market economy. Competition crucially depends on effective merger control,” he said.

“Companies have a clear incentive to merge with or acquire their competitors to increase their market power and raise prices. This is why effective merger control is so important, and why some mergers must be blocked by competition authorities.

“We know that once market power is gained from a merger, it is very difficult to restore competition with our other competition enforcement tools, making it crucial for us to use merger control more effectively.

“The focus of competition agencies, courts and tribunals must be on the importance of protecting competition and preventing anticompetitive mergers, otherwise there is a risk that merger control instead skews towards merger clearance and so damages our economy.”

Response from global law firms

When asked if the proposed focus from ACCC and the two international regulators will have an impact upon the M&A landscape in Australia, Herbert Smith Freehills chair and senior partner Rebecca Maslen-Stannage said that her firm agrees that it is critical to protect consumers by testing mergers for any anticompetitive effects.

“We see the existing law as working well to achieve those objectives. Fortunately, the vast majority of deals don’t give rise to significant competition issues, as the joint statement acknowledges. In contentious matters, the differences of view between the ACCC and deal parties is often as to the facts,” she said.

“The ACCC has very wide information gathering powers and put that evidence to the court. The courts are well equipped to test rigorously the factual position with the benefit of that information.”

For lawyers working in M&A, it will remain important, Ms Maslen-Stannage continued, to engage with competition law colleagues so a “realistic assessment” of whether a merger is anticompetitive or not can be undertaken.

“Where it is not, they help clients gather the objective evidence (often including expert economist input) regarding any market impacts. Ideally this evidence persuades the ACCC to clear the merger,” she explained.

“In cases where, unfortunately, the parties and the ACCC have a difference of view on the effects of a merger and a court process is necessary, that evidence is important to the Court’s assessment.”

Dentons partner Donald Robertson said that his firm welcomes the statement from ACCC, CMA and Bundeskartellamt, “especially in modern markets where economic principles continue to be developed and can lead to some surprising conclusions about how properly to undertake economic analysis and what is the proper justification of mergers and other market arrangements”.

Ms Maslen-Stannage assumed her new role as chair last month. She spoke with Lawyers Weekly about what it means to be the first female in this role at HSF, what she’s hoping to achieve, and more.

Mr Robertson joined Dentons from HSF two weeks ago. He spoke with Lawyers Weekly about how Australian lawyers can and should react if US President Joe Biden decides to rejoin the Trans-Pacific Partnership.