An interview on ACCC’s approach to compliance, mergers and enforcement
In an exclusive interview with Sarah Court, Commissioner at the Australian Competition and Consumer Commission (ACCC) - we shed light on the ACCC’s approach to compliance, current enforcement priorities; and the scope and expectations the M&A community should be aware of.
- What are the ACCC’s current enforcement priorities?
- On commencing a transaction, when should organisations be engaging with the ACCC? How early in the piece?
- 6 things you should know
Sarah Court oversees the ACCC’s enforcement and litigation program, and is chair of the Commission’s Enforcement Committee. Sarah brings to her role extensive experience in Commonwealth legal work, including restrictive trade practices, consumer protection and law enforcement litigation.
What are the ACCC’s current enforcement priorities?
Thanks to our enforcement outcomes most people know what we are about - we are the national agency responsible for promoting fair trading and protecting consumers. Behind the scenes we are making sure we direct our resources to the matters which provide the greatest overall benefit for competition and consumers.
We think some forms of conduct are so detrimental to consumer welfare and the competitive process that we will always assess them as a priority. This includes cartel conduct, anti-competitive agreements, and the misuse of market power. In addition, product safety issues which have the potential to cause serious harm to consumers will always be a priority.
We also have our sights set on a number of important issues within emerging sectors, including:
- Consumer protection in the telecommunications and energy sectors
- Online competition and consumer issues including conduct which may impede emerging competition between online traders; or limit the ability of small businesses to effectively compete online
- Competition and consumer issues in highly concentrated sectors, in particular in the supermarket and fuel sectors
- Credence claims, particularly those in the food industry with the potential of significant impact on consumers or the competitive process
- Misleading carbon pricing representations
- The Australian Consumer Law Consumer Guarantees regime
- Consumer protection issues impacting on Indigenous consumers
On commencing a transaction, when should organisations be engaging with the ACCC? How early in the piece?
It is not compulsory for merger parties to notify the ACCC before undertaking a merger, but we strongly recommend that parties notify us where their products are substitutes or complements, and the merged firm will have more than a 20 per cent share of any relevant market(s). Given the inherent difficulties with defining markets and therefore determining ‘market shares’, this notification threshold is an initial guide only. We recommend that merger parties consult us if there is any uncertainty or risk that the merger may raise competition issues.
Merger parties should approach us as soon as there is a real likelihood that a merger will proceed and well before completion. We can then discuss, including on a confidential basis, the options for having the matter considered by the ACCC and what information will be required. The majority of mergers considered by the ACCC are not likely to raise competition concerns and can be cleared by conducting a preliminary desktop review. In the 2012/2013 financial year, around 73 per cent of transactions were cleared in this way, often within a couple of weeks.
We conduct intelligence gathering and monitoring activities, and can investigate a possible merger even if we have not been notified by the merger parties. Undertaking a merger without ACCC clearance may expose the acquirer to a risk of legal action, including action to unwind the transaction.
6 things you should know…
1. Three questions are generally considered by the ACCC to determine whether there has been a misuse of market power:
- Does the company have substantial market power?
- Is it taking advantage of that power?
- Is it using the power for an unlawful purpose?
2. 2012, section 50 of the Competition and Consumer Act 2010 (CCA) was amended to remove the requirement that a market be ‘substantial’. This change clarified the ACCC’s ability to review acquisitions in all markets, regardless of their size.
3. A key change in the 2013 Informal Merger Process Guidelines (published 26 September, 2013) is to move away from the practice of setting a standard eight week period for all public merger reviews at the outset.
While the ACCC will still try to complete the majority of merger reviews within eight weeks, some merger reviews which are highly contentious will have a longer and more realistic timeframe from the beginning.
4. It is not compulsory for merger parties to notify the ACCC before undertaking a merger. However the ACCC strongly recommends that parties notify it where the products are substitutes or complements, and the merged firm will have more than a 20 per cent share of any relevant market(s).
5. Parties can minimise delays by providing all relevant information at the commencement of the ACCC’s review, as specified in the 2013 ACCC Informal Merger Process Guidelines. See Informal Merger Review Process Guidelines 2013 for further details.
6. In contentious matters, it would also assist in avoiding delays if merger parties made detailed submissions to the ACCC, at the outset of its review, on the issues about which market participants are likely to have divergent views.