Massive overhaul of Australian competition rules takes aim at besieged supermarkets

Supermarkets are in the firing line of the biggest changes to Australian takeover rules in half a century, with Treasurer Jim Chalmers to give the competition watchdog a new set of teeth amid rampant living cost pressures.

Dr Chalmers will on Thursday introduce a Bill setting out new rules requiring any mergers that exceed a broad set of financial thresholds to get approval from the Australian Competition and Consumer Commission.

The Treasurer’s big pitch is that the overhaul — pushed by the ACCC and designed to bring Australia’s looser rules into line with similar countries — will “target mergers that are anti-competitive, while allowing mergers that are pro‑competitive to proceed faster”.

It comes as giants Coles and Woolworths face huge public and political reckoning following decades of steadily buying out smaller competitors and dominating Australia’s retail landscape.

The ACCC in September launched legal action against the retailers, accusing them of misleading inflation-battered customers on “illusory” discounts. The Federal Government has got behind the effort by handing the watchdog an extra $30 million over the next three years to strengthen its crackdown on the sector.

Under the current regime, the Gina Cass-Gottlieb-chaired ACCC only has the power to stop or legally challenge mergers it deems as having a substantial impact in the market.

Companies are also not required to notify the competition umpire of an upcoming merger, or wait for it to be completed.

The new proposed rules however set out monetary thresholds for deals that will then need to be referred to and approved by the ACCC, which will also keep a public register of the transactions.

The ACCC will need to be notified of every merger in the supermarket sector.

“Only mergers above monetary thresholds will need to be notified to the ACCC and be approved before proceeding,” Dr Chalmers will say.

“Serial” acquirers, and deals where the buyer is far bigger than the seller, have been specifically targeted.

And amid the heightened scrutiny of the retail sector, the Treasurer can also tweak the thresholds “to respond to evidence-based concerns from the ACCC about high-risk mergers, like in the supermarket sector,” he will say on Thursday.

“Using the provision, the Government intends to make sure the ACCC is notified of every merger in the supermarket sector.

“Reviewing every supermarket merger is all part of the decisive action our Government is taking to help Australians get fairer prices at the checkout.”

From 2026, a merger will need the green light from the watchdog if the combined turnover of the merging businesses is more than $200 million, and either the business or assets being bought has turnover higher than $50 million, or the global transaction value is above $250 million.

Deals where an Australian business turning over $500 million tries to buy out another smaller business, with turnover above $10 million, will also be captured under the new rules.

It remains to be seen whether “market concentration thresholds” that had popped up in some briefings from legal firms following the release of an consultation paper in August, are included in the Bill.

Legal and business circles have largely been prepared for the changes, but there are concerns nonetheless that it will create another layer of bureaucracy for companies to work through and threaten Australia’s international investment appeal.

Mr Chalmers has promised mergers that pose “no threat” to competition will get through in 30 days.

Questions have also been asked about the resourcing capabilities of the ACCC amid what would likely be a substantial new wave of work.

In an interview with The West Australian in April, ACCC chair Ms Cass-Gottlieb said “the vast majority of mergers” would have no likely impact on competition and would be able to “proceed quickly”.