I think there are two separate issues. The first is market definition and, while the ACCC have been prepared to narrowly define the market in certain grocery cases, the Act itself requires a ’substantial’ market – so it would be interesting to see whether the courts would accept the ACCC’s definition of market in all cases. Similarly, the definition is restricted to an Australian market, so for truly global markets the ACCC is not permitted to define the market any more broadly than Australia – again, they tend to get around this in their internal analysis, but the outcome might be different if challenged in court.

In any event, even a narrowly defined market might not capture creeping acquisitions. That is, if there is a dominant player and several smaller players in the market, the dominant player could grab each of them one by one and in most cases this might not have any significant impact on competition – but if you add them up (over 3 or 4 small acquisitions) it might have that result. The Act currently does not allow that to be taken into consideration – the single merger involved must SLC. I think (if practical) this aggregate model would be quite consistent with a SLC approach. However, if that model is unworkable in practice I would prefer them to abandon creeping acquisition laws altogether rather than pursue the market dominance approach they are currently proposing – that approach is genuinely inconsistent with the existing SLC test for mergers.

I agree that there is no easy way to differentiate mergers which enhance market power and those that lessen competition; one generally follows from the other – however, the test proposed talks about ‘any’ increase in market power – which might lead to a ‘lessening’ of competition but would not necessarily require a ’substantial lessening’ of competition. It is certainly conceivable that a small acquisition might enhance – marginally – the market power of a dominant firm without substantially lessening competition in the relevant market and consequently it would capture more mergers than the current law.

The government is also looking (it appears) solely at Australian markets – what if a foreign firm, which does not have substantial market power in an ‘Australian’ market (as the market must be defined) wants to acquire a small firm? Would they be excluded from the creeping acquisition laws? Would this be a fair result? Does this raise concerns about consistency in merger regulations around the world – which are largely converging (at least in a substantive sense) – and does that matter? There are lots of issues that should be fully worked through but it seems unlikely they will be as the Government has indicated a desire to introduce these laws quickly.

Interesting issues though – and I’m concerned that the Government seems very keen to adopt the ACCC’s recommendations without pursuing these issues in much detail (the second discussion paper didn’t really address these concerns at all)

I still find it hard to understand why the creeping acquisition law – even if it is based on a model taking into account the pervious series of acquisitions within a reasonable time fram – would be necessary for merger control in general. In particular when a grocery merger is assessed, we often see that the SLC test is applied to a very narrow local market e.g. 10/15/20mins isochrones to the questioned store. It seems to me that the ACCC should refine its local analysis, rather than relying on a creepy creeping acquisition law, which potentially contradicts the SLC approach in my view.

At the end of the day, how do we differentiate the merger that is to enhance market power and substantially lessen the competition in a market, from one that is to enhance market power but NOT likely to substantially lessent he competition?