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

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

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

ACCC Informal Review

Formal Review (ACCC/Tribunal)

Tribunal Authorisation

Declaration


Key features of australian merger review informal

Key features of Australian merger review (informal)

  • Not suspensory

  • Pre-assessments

  • Public and Confidential reviews


Confidential reviews

Confidential reviews

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

  • 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)

  • 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)

  • 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?

  • 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?

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

  • 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

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

  • 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

  • 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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