Speaking at the National Press Club in Canberra on “Market power in the COVID-19 era”, ACCC chair Rod Sims said it was crucial for Australia to tackle the issue of market power as it sought to recover economically from the pandemic and deal with the implications of an ever-growing digital economy.

Mr Sims said a strong recovery will depend on a competitive economy so “we want the innovation, efficiency and restructuring our economy needs, without the damaging consequences from market power being leveraged to the detriment of competition and consumers.”

Mr Sims said the ACCC would push for changes to the country’s merger laws next year, saying the current laws were too weak to stop “inappropriate increases in market power”.

The ACCC noted it received 288 merger applications during the year, of which 257 were passed without an inquiry and 31 were subject to public review. Only one was opposed, which is the Woolworths’ B&J City Kitchens-Jewel food services deal.

The ACCC chairman said the Australian economy was already very concentrated as he highlighted the increasing dominance of tech giants Google and Facebook.

“I cannot fail to mention the debate Australia needs to have about how concentrated we want our economy to be and therefore how we approach assessments of the competition effects of mergers,” he said.

“How much stronger and more entrenched is Facebook with its very many and continuing acquisitions, including Instagram and WhatsApp; and Google with its numerous acquisitions including YouTube and the digital advertising intermediary DoubleClick?”

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Mr Sims said the ACCC had not won a contested merger case in the courts since 1992, when the competition test was relaxed. He pointed to the ACCC’s recent failures to stop AGL from acquiring Macquarie Generation and the merger between TPG and Vodafone.

He highlighted the forthcoming battle over merger laws over the next year.

“First, we enforce competition laws. But I believe you cannot rely on competition laws alone to stop or deal with all the adverse consequences from growth in market power,” he said. 

“Our cartel laws, whilst clunky and technical and challenging to enforce, are nonetheless effective. So much so that people of the same trade these days seldom meet with each other without their competition lawyers present.

“The second focus of competition laws now sees us with the new section 46 test of behaviour which has the purpose or effect of substantially lessening competition, introduced in late 2017, which replaced an ineffective and largely unusable law.”

Mr Sims said the courts recently appear to be setting a high bar for what is considered to be unconscionable. 

“In one case, now on appeal, the judge indicated that ‘unconscionability’ must involve conduct against a person or a small business who is at a special disadvantage,” he said.

“This view, which is the subject of our appeal, restricts the law to a narrow common law principle dating back three centuries, despite the law having moved on with parliament legislating prohibitions that step away from such past doctrines.”

The chairman said that currently, Australia’s merger laws cannot prevent all inappropriate increases in market power.

“However where you draw the line on which mergers proceed and which should not is complex,” he said.

“We will put forward ideas for changes to our merger laws in 2021. This will trigger an important debate.”