TRADE PRACTICES
Creeping
Acquisitions - Government announces changes to merger regulation
22 January 2010
The Competition Minister, Dr Craig Emerson, announced today the Government's intention to amend section 50 of the Trade Practices Act (TPA) to empower the ACCC to better deal with creeping acquisitions. A copy of the Minister's announcement is available here
The announcement states that changes to the TPA will confirm the ACCC's ability
to define a local market, such as a suburb, as a relevant market when assessing
the effects on competition of proposed mergers or acquisitions. The
changes will also confirm that the assets regulated by section 50 of
the TPA include land and interests in land. For example, it confirms that
an acquisition of potential shopping centre sites by Coles or Woolworths can be
reviewed by the ACCC under section 50.
The drafting of the proposed amendments has not yet been released. It is therefore difficult to confirm if the changes will have the effect that is claimed. We note, however, that the ACCC does not appear, to date, to have considered itself limited in examining ‘local' markets in merger proposals. For example, in 2008 a proposed acquisition by Woolworths of a Supabarn near Queanbeyan, NSW was blocked by the ACCC because of the impact on competition in the area 3-5km around the site. The Government's proposal seems to confirm the ACCC's existing approach rather than suggest or authorise anything new.
Similarly, the ACCC has to date (in our view, correctly) proceeded on the assumption that section 50 already empowers it to review acquisitions of land or interests in land. Again, the Government's proposal seems to confirm the ACCC's current approach rather than suggest or authorise a new one. It therefore remains to be seen whether the proposed changes will end pressure on the Government to introduce more extensive changes to address the perceived problem of creeping acquisitions.
We expect that a draft Bill containing the full text of the proposed amendments will be available for review shortly. We will report further if the draft Bill suggests that the proposed changes will have a more extensive effect than outlined above.
If you have any questions, please contact one of our partners named below.
Richard Westmoreland
Robert Gardini
Peter van Rompaey
(02) 9334 8717
(02) 9334 8619
(03) 8633 7506
Steve Burns
Simon Tolhurst
(02) 9334 8841
(07) 3002 6749
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