By Byron Kaye and Scott Murdoch
SYDNEY (Reuters) – The blocking of three major deals by Australia’s antitrust regulator in the past year was a coincidence, its chair told Reuters, pushing back against concerns among bankers that it has become deal-averse.
Since December, the Australian Competition and Consumer Commission (ACCC) has ruled against a data-sharing agreement between telecoms giant Telstra and internet provider TPG Telecoms as well as a buyout by ANZ bank of a smaller rival. It also blocked a purchase by Transurban of a Melbourne road.The quashing of the deals, worth a combined A$9 billion ($6 billion), has given rise to concerns within the M&A community that there is now more uncertainty about whether deals can proceed and that foreign investors will have less appetite for Australian transactions.
“There happens to have been a sequence, frankly coincidentally as it turns out, of oppositions,” ACCC Chair Gina Cass-Gottlieb said in an interview.
“The vast majority of mergers the ACCC continues to see as not contentious,” she added, noting the regulator approved 93% of deals in the year ended in June.
Investors will be closely watching an Oct. 12 ACCC ruling on one of Australia’s biggest deals this year – the A$15.4 billion bid by a consortium led by Canada’s Brookfield for Origin Energy, the country’s No.2 power producer.
There are some concerns that it could be blocked as Brookfield owns AusNet, a poles and wires asset in Victoria state.
COST OF LIVING FOCUS
Cass-Gottlieb, a former competition lawyer who came in to helm the ACCC in March 2022, said there had been no changes in how it assesses deals under her leadership.
But she added the three deals were blocked “in the context where there is much focus, particularly in relation to essential services, on cost of living and cost of doing business pressures”.
The regulator’s methods of assessing deals do not change in periods of high inflation, but “we are conscious that the impact of removing competitive pressure on prices is of even greater focus”.
Inflation in Australia is running above 5%, nearly double the central bank’s target range.
She said the ANZ decision in August was a good example. Australia’s No. 4 lender had been looking to buy insurer Suncorp’s banking division, but the ACCC was concerned about the supply of agribusiness banking in Queensland, Suncorp’s heavily rural home state, she said.
She recused herself from that ruling due to a conflict of interest in her previous career.
Cass-Gottlieb also said she doubted foreign investors have been dissuaded from pursuing deals in Australia which does not require companies to get formal clearance before proceeding with a takeover.
Investors from abroad “are sophisticated, well-advised parties and they would be dealing with antitrust agencies in multiple jurisdictions”, she said. “I don’t think there is anything here that is going to raise a red flag.”
Australian inbound announced M&A deals have roughly doubled this year to be worth $41.9 billion, according to LSEG data.
Cass-Gottlieb has said she wants to make it harder for already dominant players to build market share incrementally, noted Stephen Corones, an emeritus professor at Queensland University of Technology and a former chair of the Treasurer’s consumer advisory committee.
The watchdog under Cass-Gottlieb is “applying the existing law in a way that gives effect the reform it’s seeking”, he said in an email.
Hannah Marshall, a partner at Marque Lawyers who specialises in competition law, said she supports the ACCC’s focus on essential services, but questioned decisions where the regulator has blocked a deal and offered alternative, preferred, buyout scenarios that involved different companies.
“It’s fair that the Commission is concerned to protect critical industries like transport, telco and banking, but it’s also true it has gone too far with its future scenario analysis,” she said.
“The recent stream of merger blockages will make foreign investors think twice.”
($1 = 1.5521 Australian dollars)
(Reporting by Byron Kaye and Scott Murdoch; Editing by Edwina Gibbs)
