Australia, UK, Germany team up to stop big tech’s monopoly from soaring

Competition watchdogs from Australia, the United Kingdom, and Germany have signed a pact to clamp down on mergers, particularly those in the tech space that impact competition.

The Australian Competition and Consumer Commission (ACCC), UK Competition and Markets Authority (CMA), and Germany’s Bundeskartellamt have jointly agreed [PDF] there is a need for “rigorous and effective merger enforcement”.

“The purpose of merger control is to ensure that relevant transactions are assessed, and anticompetitive mergers are prevented so that consumers benefit from the lower prices, higher quality products and services, greater choice and innovation that effective competition brings,” the trio wrote.

“Without strong merger control regimes, there is a risk that mergers will proceed that lessen the level of competition by weakening competitive constraints and in some cases strengthening dominant positions.”

See also: Australia to leave digital giant break up work in the hands of the United States

Of concern to the regulators is the “rise of acquisitive tech giants” with activities across multiple current or future markets.

“Anticompetitive mergers in these markets can cause significant harm given the increased importance of these products and services and the aggregation of data over time across various services,” they said.

“Technology markets can also be examples of highly concentrated markets with features such as high barriers to entry due to network effects. This can result in high market concentration, such that market power is easily created or entrenched, and is likely longlived.”

The group said merger controls are the first line of defence; if a merger is approved, and the new entity develops market dominance, there is often little that competition agencies can do to address the situation retrospectively with the tools available.

They said even a seemingly small transaction could cause a competitive market to tip in an anticompetitive direction, pointing to the acquisition of a small startup as an example of thwarting what could have otherwise resulted in a major competitive threat to the purchaser in the longer term.

“It’s important that we continue to thoroughly examine mergers on behalf of business and consumers — especially in dynamic markets like digital — and take strong action where needed,” CMA CEO Andrea Coscelli said.

The way forward, according to the three regulators, would be to implement effective merger control, with all three jointly saying this is vital for ensuring competitive markets are able to exist in a free market economy.

“Competition drives prices down; quality, choice, and service up; and pushes companies to innovate,” they said. “Competition can only be maintained by ensuring anticompetitive mergers do not happen. This is even more so in a fast-developing digital world impacted by the coronavirus (Covid-19) pandemic.

“We believe that in the world today there is a real need for strong merger enforcement from competition agencies globally to ensure that high concentration levels do not become the accepted norm, and to maintain and promote competition for the benefit of consumers.”

The statement ended by “strongly encouraging” competition agencies, courts, and tribunals to protect competition also when there is uncertainty raised by contentious mergers and ensure the interests of consumers are promoted over the profits of the merging firms.

“Abuse proceedings are difficult, lengthy, involve many economic and legal issues when it comes to Big Tech, and are merely aimed at a company’s specific conduct,” Bundeskartellamt president Andreas Mundt added. “If we do not rigorously apply merger control and prohibit anti-competitive mergers, the post-merger road that we subsequently have to take is a very difficult one.”

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