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Striking a balance between competition compliance and business costs – an Australian perspective. Dr Jill Walker Commissioner Australian Competition & Consumer Commission Competition Law Conference 2012, Singapore, 27 July 2012. Overview . Australian merger law Review mechanisms

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Striking a balance between competition compliance and business costs an australian perspective

Striking a balance between competition compliance and business costs – an Australian perspective

Dr Jill Walker

Commissioner

Australian Competition & Consumer Commission

Competition Law Conference 2012, Singapore, 27 July 2012


Overview
Overview business costs – an Australian perspective

Australian merger law

Review mechanisms

Key features of informal review

Incentives to notify

Scaled approach to merger review

Firms in administration

International co-operation


Australian merger law
Australian merger law business costs – an Australian perspective

Court based v administrative system

Section 50 of the Competition and Consumer Act (2010) prohibits acquisitions of shares or assets that result in, or are likely to result in a substantial lessening of competition in any market.

S.50(3) – the merger factors – a non-exhaustive list of factors that must be considered to determine if an SLC is likely

Remedies - s.87B court enforceable undertakings

ACCC Merger Guidelines 2008

Australian Competition Tribunal can “authorise” mergers on public benefit (efficiency) grounds


Avenues of review
Avenues of Review business costs – an Australian perspective

ACCC Informal Review

Formal Review (ACCC/Tribunal)

Tribunal Authorisation

Declaration


Key features of australian merger review informal
Key features of Australian merger review (informal) business costs – an Australian perspective

  • Not suspensory

  • Pre-assessments

  • Public and Confidential reviews


Confidential reviews
Confidential reviews business costs – an Australian perspective

optional

CONFIDENTIAL review

Decision by MRC / Commission

2-4 week assessment period

Advise merger party/s

of confidential view

PUBLIC review

  • Undertaken at request of parties

  • ACCC’s view is qualified as being subject to market inquiries

  • Benefits of seeking a confidential view:

    • reduction or elimination of substantial assessment once matter becomes public

    • early identification of key competition issues and concerns


Public review
Public review business costs – an Australian perspective

  • Market inquiries and public register

  • 6-8 week indicative review timeline

  • Consultation with merger parties

  • Possible outcomes:

    • no substantial competition concerns, informal clearance is granted

    • competition issues identified, further information required – Statement of Issues published

PUBLIC review

Initial assessment

Market inquiries

Decision by MRC/Commission

Merger not opposed

Statement of Issues

published

Advise merger party/s

Secondary timeline

established


Key features of australian merger review informal1
Key features of Australian merger review (informal) business costs – an Australian perspective

  • ACCC ‘decision’ = ACCC view and ACCC would look to challenge the merger in the Federal Court

  • If the ACCC opposes a merger – 3 likely options

  • Parties abandon merger

  • Possible remedies proposed by merger parties

  • ACCC challenges the merger in Federal Court

  • Small number of matters go to court - AGL v ACCC and ACCC v Metcash only completed litigation and judicial decision under SLC test


Notification process informal
Notification process (Informal) business costs – an Australian perspective

  • Notification is voluntary

  • No fee

  • Methods of notification

  • merger parties

  • other regulators

  • ACCC surveillance – eg monitoring press

  • complaints


How do merger parties know whether to notify the accc
How do merger parties know whether to notify the ACCC? business costs – an Australian perspective

  • Merger parties are encouraged to notify the ACCC well in advance of completing a merger where both of the following apply:

  • the products of the merger parties are either substitutes or complements; and

  • the merged firm will have a post-merger market share of greater than 20 per cent in the relevant market/s.


Why do merger parties voluntarily seek clearance
Why do merger parties voluntarily seek clearance? business costs – an Australian perspective

Remove any risk and uncertainty of challenge

Will ACCC notice?

Option of seeking view on confidential basis

Litigation – including by injunction

Impact of process on compliance costs – scaled approach


Scaled approach to merger review
Scaled approach to merger review business costs – an Australian perspective

  • Scaled approach to information requirements

  • Pre-assessment of low SLC risk mergers

  • Majority of reviews < 8 weeks

  • Timelines transparent


Reviews involving firms in administration
Reviews involving firms in administration business costs – an Australian perspective

Conflicting incentives at times between administrators and ACCC

Timing pressures likely

Early notification important

Identification of key dates in the sales process

Information requirements judged on a case-by-case basis


International mergers
International Mergers business costs – an Australian perspective

  • Australia can be “forgotten” by HQ in global merger notifications, especially with voluntary notification

  • Global mergers can have significant impacts on Australian markets

  • Liaison with overseas regulators on global transactions

  • Coordination of substantive review

  • Identify whether issues are unique to Australia

  • Coordination of remedies often important

  • Cooperation agreement with New Zealand


Conclusion
Conclusion business costs – an Australian perspective

  • Competition compliance and business costs – right balance?

  • Further information is available from the ACCC’s website: www.accc.gov.au/mergers

  • Questions?


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