Creeping acquisitions under spotlight as ACCC flag changes to competition laws

Posted by Daniel Palmer on 20th June 2008

Major legislation changes are likely to be recommended when the ACCC release their report into the competitiveness of the grocery industry, based on comments made by ACCC Chairman Graeme Samuel yesterday.

Speaking at a lunch hosted by the Australian Institute of Company Directors, Mr Samuel indicated that he thought certain companies may have provided them with information that they would have preferred to keep secret.”The public hearings enabled us to put some people under the pump to find out just what was going on,” Mr Samuel claimed.

Mr Samuel also spoke of his concern about “creeping acquisitions”, which lead to large companies steadily increasing their market share by making a number of small acquisitions. The issue with this is that the ACCC is powerless to stop each takeover, as a takeover of a very minor competitor is unlikely to breach competition law. As a company makes a series of small purchases, however, the competition could decline considerably.

“The Trade Practices Act, on our best legal advice, does not permit us to stop parties that are engaging in acquisitions of assets by small increments,” he advised. “The law only prohibits an acquisition that is likely to lead to a substantial lessening of competition. Those creeping acquisitions – be it in supermarkets or other industries – can lead ultimately to significant dominance and potential monopolisation.”

Mr Samuel believes that the inquiry has provided the competition watchdog with the “capacity to provide the federal government advice and recommendations on the steps they might take.”

The ACCC’s final report into the state of competition in the grocery industry is due to be completed by July 31.