Harmful mergers happening 'under the radar', ACCC warns

The Australian Competition and Consumer Commission has told the federal government's competition policy review that merger rules need to change to make it mandatory for businesses to notify of proposed acquisitions above a certain threshold and receive regulator approval before proceeding.

ACCC chair Gina Cass-Gottlieb said the watchdog currently lacked the tools it needed to prevent all anti-competitive acquisition, which meant that "harmful mergers may be taking place under the radar".

Ms Cass-Gottlieb said consumers and businesses were at risk of elevated prices and markups because of high levels of concentration and weakened competition in many sectors.

The ACCC's call for merger law reform comes amid increasing scrutiny of the behaviour of dominant firms in key industries including food and groceries, banking and aviation.

Former ACCC head Alan Fels is leading an Australian Council of Trade Unions investigation into price gouging and earlier this month the Senate launched an inquiry into supermarket prices.

Treasurer Jim Chalmers backed the Senate inquiry, saying that he government wants, "Coles and Woolies and the supermarkets to pass on savings when inflation moderates".

"We want to make sure that they're doing the right thing by their customers," Dr Chalmers said.

The Treasurer said the two-year competition review would examine broader competition settings in the economy, including regarding mergers and acquisitions, but the government was prepared to act sooner and "not wait to the end of that two-year period".

The ACCC submission comes as several high-profile mergers have been announced, including a proposed $8.8 billion deal between the Chemist Warehouse Group and Sigma Healthcare and miner Woodside's planned acquisition of energy firm Santos.

Ms Cass-Gottlieb said that under Australia's current merger rules, companies do not have to notify the ACCC of planned acquisitions and can proceed without having to wait for approval.

If a potentially anti-competitive merger is completed the ACCC is forced to take legal action in the Federal Court to have it unwound.

The ACCC head said the nation's merger regime, particularly the lack of a notification requirement, was an "outlier" among most advanced economies.

She said under current rules, companies were increasingly using tactics to pressure the watchdog not to oppose transactions, like delaying notification and threatening to complete mergers before the ACCC has completed its review.

"We shouldn't have a process that is prey to legal brinkmanship, with all the uncertainty and expense that entails," Ms Cass-Gottlieb said.

There is concern that if the merger regime is too onerous it could stifle acquisition activity, but the ACCC boss said the watchdog's proposed model struck "the right balance", with minimal burden for deals that do not undermine competition while having a "structured, transparent and timely process" for deals with potential anti-competitive effects.