Creeping Acquisitions Bill Introduced

The Competition and Consumer Legislation Amendment Bill was introduced into Parliament today.  It includes the following key amendment to the competition law provisions:

(1) replacing the words ‘a market’ in section 50(1) with ‘any market’

(2) Removing the requirement that a market, for purposes of the merger provision, be a ‘substantial’ market, by removing the word substantial from subsection 50(6)

The Government claims that this will address some of the concerns raised about creeping acquisitions.

Detail on the changes

Subsection 50(1)

The existing s 50(1) provides:

A corporation must not directly or indirectly:

(a) acquire shares in the capital of a body corporate; or

(b) acquire any assets of a person;

if the acquisition would have the effect, or be likely to have the effect, of substantially lessening competition in a market.

The bill proposes to amend the last two words from ‘a market’ to ‘any market’. This, the EM explains (at para 1.33)  is to ‘clarify the ability of the ACCC or a court to consider multiple markets when assessing mergers’ and to ‘prevent businesses from being able to challenge a decision that a proposed merger or acquisition would, or would be likely to, substantially lessen competition in a market in breach of section 50, on the grounds that the lessening of competition identified was in one or more markets other than the primary market in which the merger or acquisition would occur.’

Subsection 50(6)

The existing provision provides that, for purposes of s 50:

market means a substantial market for goods or services in:

(a) Australia; or

(b) a State; or

(c) a Territory; or

(d) a region of Australia.

The bill proposes to remove the word ‘substantial’. The government claims that the current provision is unclear about whether or not the market definition extends to ‘local’ markets and is also unclear on just how ‘substantial’ a market must be to be caught. In particular, they claim (at para 1.28 of the EM) that removing the word substantial will ‘remove the risk … that a court may in the future adopt the view that the substantiality of a market should be determined with reference to Australia as a whole.’ The EM goes on to state that the ‘amendment will also remove doubts regarding the ACCC’s ability to examine markets where creeping acquisitions concerns may arise in the future’.

They are the proposed changes in a nutshell.  More detail to follow soon.

Note: Dr Emerson’s second reading speech is now available.