Do you ever get the sense that some of our biggest companies seem to slowly gobble up more of their smaller rivals, thereby gaining more and more power to set prices?
If so, you’re not alone. The competition watchdog has long shared this fear. Indeed, the fact that so many industries are dominated by a few corporate giants – an issue called market concentration – is a growing concern around the world, including here. Now the government wants to do something about it.
Australian households could well be paying quite a cost for the high level of concentration in the marketplace, which can result in higher prices, weaker wages, less innovation and less productivity.Credit: Chris Hopkins
This week, Treasurer Jim Chalmers kicked off consultation in a process to assess if our regime for approving corporate deals is too permissive, and making competition feebler than it should be.
While no policy action has been decided yet, the federal government’s competition review is looking at whether to shake up the approvals that larger companies need to get when buying out a rival.
It’s a debate that’s likely to be fiercely contested, and reforms may well be opposed by some parts of the business world. But it’s about time the government had a hard look at the merger regime, which appears to be part of our competition problem.
Our economy is something of a land of oligopolies. One economist who’s repeatedly highlighted this is former Australian Competition and Consumer Commission chair Rod Sims, who is now part of an advisory panel for Treasury’s competition review.
Sims says we’ve got two major supermarkets with 70 per cent of the market; one dominant airline with two-thirds of the market; two beer companies with 90 per cent of the market; and two ticketing companies, also with 90 per cent of the market. And that’s not including the banks, insurance companies, or telcos.
“When you look at how concentrated our economy is, it’s way more concentrated than other countries overseas,” Sims says.
Eating ourselves alive: Why we need to change the way we do mergers
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25.11.2023
Do you ever get the sense that some of our biggest companies seem to slowly gobble up more of their smaller rivals, thereby gaining more and more power to set prices?
If so, you’re not alone. The competition watchdog has long shared this fear. Indeed, the fact that so many industries are dominated by a few corporate giants – an issue called market concentration – is a growing concern around the world, including here. Now the government wants to do something about it.
Australian households could well be........
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