Competition Law

Australian Competition Law and Policy Discussion

Creeping acquisitions … the journey continues …

Posted by Julie Clarke on 1 December 2009

Yesterday the  Senate referred the Trade Practices Amendment (Material Lessening of Competition—Richmond Amendment) Bill 2009 (introduced into the Senate last Thursday) to the Senate Economics Committee for an inquiry and report.  This is a private member’s bill, rather than a Government bill, sponsored by Nick Xenophon.

The Bill proposes to amend the TPA in relation to creeping acquisitions.  The proposal involves ‘preventing corporations from directly or indirectly merging, or acquiring an asset, which would result in ‘material’ lessening of competition in the relevant market.  The word ‘material’ refers to a pronounced or  noticeably adverse effect on competition’, a lower threshold than the current test.   It would also prevent any corporation with substantial market share acquiring shares or assets if the acquisition would have the effect or likely effect of lessening competition (no material effect necessary).

This differs significantly from the two government issues papers on creeping acquisitions released last year and earlier this year.

I have much to say on the proposal but, as the Senate has requested withholding submissions until released by the Committee, I will refrain from expressing my views until a later date.  [Note: my submission has now been released by the Committee and can be viewed online] At this stage it is hard to know if this is a serious proposal (leaving aside content, as a private member’s bill it is almost certainly doomed to failure) or is designed to provoke the Government into releasing its own creeping acquisition legislation – something it originally promised to do by mid-this year.

One thing is certain: Economists will have fun with this one. So will I. Submissions are due by 18 December.  Reporting date is 18 March 2010.

View all submissions.

3 Responses to “Creeping acquisitions … the journey continues …”

  1. James said

    Good on Nick Xenophon. Taking on Scientology and now the big end of town. Such a shame it won’t likely get through given he’s an independent, but clearly the major parties haven’t been very successful in this area given the many duopolies in this country.

  2. He can take on Scientology all he likes … but just as Barnaby Joyce should have stayed well clear of misuse of market power laws, Nick Xenophon should probably give merger law a wide berth … Xenophon, like Joyce, make the mistake of equating market share with market power (among other things)

  3. […] recommendation is, of course, identical to that proposed in the Richmond Amendment and with essentially the same (brief) reasons given – the current test, it is argued, imposes […]

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