ACCC Chair before Standing Committee on Economics
ACCC Chair, Gina Cass-Gottlieb, made her first appearance before the House of Representatives Standing Committee on Economics today.
In addition to a range of general and consumer issues, Ms Cass-Gottlieb was asked about mining concentration and the impact of a proposed Qantas-Alliance proposed merger on FIFO workers. In response to the latter she stated:
We are looking very closely at the Qantas-Alliance proposed merger. That entails obtaining information through market inquiries from customers, and obtaining information from the parties and obtaining information from competitors. We have issued a statement of issues which sets out concerns, particularly in relation to the FIFO charter services, as Qantas and Alliance are the two larger participants, although there are smaller participants. As we're still in the process of reviewing this transaction, it's best that I refer to the issues as we identified. But we did identify that market and those services as a market in which our preliminary view is that there is likely to be a substantial lessening of competition, which means we're looking very closely at that question, and also to other questions—the more general availability of wet leases and the question of just regular passenger services on the Brisbane-Moranbah route.
More generally she was asked the following in relation to mergers.
I'd like to go back to one of the lines of questioning the deputy chair had around the mergers. I note earlier this year there was a statement you released around examining the competition impact of past mergers, as you also referenced in one of your responses. I will read it from there:
"We continue to call for reforms to the merger regime in Australia which includes the introduction of a mandatory notification regime, to improve the effectiveness of merger control in Australia and bring it into line with international best practice …
I'm curious as to whether you have a view as to what the threshold you'd be looking for is, firstly; and, secondly, subsequent to that release back in February, which was also looking at mergers conducted to 2019, have you had an opportunity to do any further analysis to see whether in fact there are other recommendations you'd like the government to pursue?
Her response:
We do gain a lot from our post-merger review processes, and we are continuing to do them going forward, looking both at particular sectors where there are peak transactions and at areas, for instance, where we accept mergers subject to conditions, the performance of those conditions and the effectiveness of such remedies.
The ACCC has been engaged in a process of, in effect, commencing a debate about reform. We are continuing our work in relation to proposed reforms that we will, in coming months, bring to government, which we know then will be considered by government and by Treasury, as to the question for the merits and approach to such a potential consultation and such reform. The area that we are very conscious of, and one of the areas I have seen by coming within the ACCC, is that because we have an informal regime the outcome is that there can be strategic behaviour to either not report at all or report late and to constrain the ACCC in its capacity to do its job. In global transactions, where most jurisdictions do have a mandatory regime, we can certainly find that reporting may be late or notification to us may be late, which then makes it difficult for us in the context of the regime.
While we have been doing internal consideration of the thresholds, it is an important question where we want to make sure that, apart from aspects of the amount of business product supplied within Australia, so in terms of impact in the Australian economy, that there will be some sectors where the services are so critical or a repeat—for instance, an acquirer that already has a significant presence and market power in a market, so though a transaction may be small the effect may be substantial. So we are doing some quite careful thought on the threshold question because there are not simple quantitative thresholds alone, we think.
There was further questioning around facial recognition and digital platforms, including this: ‘Looking at some of our markets in particular, we have some very heavily consolidated industries, with very significant network effects. How do you drive competition when you have those very significant network effects which give big movers such natural advantages?’
Response:
Part of the traditional policy response in those areas has been to consider whether there should be additional regulation. So there has been additional regulation of various parts of energy markets which exhibit network effects, and, at periods of time, regulation of telecommunications pricing, and the NBN regulation is a good example.
One of the aspects of digital platforms that the ACCC has drawn out is the significant network effects that a very large provider of search, for instance, or of social media services, will have in two-sided markets, which bring a significant number of users across multiple services, advertisers who wish to publish their advertisements, and a combination of not only scale but scope advantages that we are seeing, and, in addition, the expansion, in an ecosystem sense, out into adjoining markets as well. So these are areas where an important policy question is whether there needs to be additional regulatory supervision and powers in order to ensure that there can still be entry and further competition in the face of incumbents with such advantages.
There were several other questions about merger (and data used in merger evaluation) as well as consumer matters.