Striking a balance between competition compliance and business costs – an Australian perspective

1. 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

2. 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

3. 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

4. Avenues of Review ACCC Informal Review Formal Review (ACCC/Tribunal) Tribunal Authorisation Declaration

5. Key features of Australian merger review (informal) • Not suspensory • Pre-assessments • Public and Confidential reviews

6. 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

7. 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

8. 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

9. Notification process (Informal) • Notification is voluntary • No fee • Methods of notification • merger parties • other regulators • ACCC surveillance – eg monitoring press • complaints

10. 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.

11. 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

12. Scaled approach to merger review • Scaled approach to information requirements • Pre-assessment of low SLC risk mergers • Majority of reviews < 8 weeks • Timelines transparent

13. 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

14. 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

15. Conclusion • Competition compliance and business costs – right balance? • Further information is available from the ACCC’s website: www.accc.gov.au/mergers • Questions?