Effective Merger Review: A Question for Australian Courts?

Abstract

There is increasing global concern about the effectiveness of merger control in competition law. Globally, concerns about rising market concentration and in particular, the effect of consolidation by digital platform businesses, have prompted numerous inquiries and articles exploring whether competition laws are effective in addressing concerns about their anticompetitive impact in relation to mergers. Australia’s approach to merger control makes it an outlier in a number of ways. Its major approval procedure, informal clearance, is outside the scope of the Competition and Consumer Act 2010 (Cth). Formal decisions are generally heard in courts. Of note, under the current “likely substantial lessening of competition” test which became operative in 1993, the Australian Competition and Consumer Commission (ACCC) has not successfully proven in court that a merger would be likely to infringe the law. This article examines the methodology of Australian courts in applying this test, including the judicial approach to acceptance and assessment of economic and noneconomic evidence. It suggests approaches to enable consideration of the best evidence available. This analysis is in the context of amendments to the merger system recently proposed by the ACCC. We conclude that there are significant challenges in determining whether a merger is anticompetitive and that changes to the relevant methodology are necessary. This might be done by adopting the ACCC proposals or by a reconsideration of the merger factors and the approach to applying them.