New merger laws a double-edged sword for businesses and investors

Small Caps04-15

Competition is vital for all Australians that want to enjoy fair prices and good quality goods and services – which is almost all of us. Which is why the beefing up of the merger laws by Treasurer Jim...

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merger laws a double-edged sword for businesses and investors\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-15 08:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://smallcaps.com.au/new-merger-laws-double-edged-sword-businesses-investors/><strong>Small Caps</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Competition is vital for all Australians that want to enjoy fair prices and good quality goods and services – which is almost all of us.\nWhich is why the beefing up of the merger laws by Treasurer Jim...</p>\n\n<a href=\"https://smallcaps.com.au/new-merger-laws-double-edged-sword-businesses-investors/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK7511","symbol_name":"ESG概念","start_time":0,"source_url":"https://smallcaps.com.au/new-merger-laws-double-edged-sword-businesses-investors/","article_id":"2427953340","we_media_id":null,"thumbnails":["https://cdn.shortpixel.ai/client/w_868,q_lossy,to_auto,ret_wait/https://150309019.v2.pressablecdn.com/wp-content/uploads/2024/04/New-merger-laws-ACCC-Treasurer-Jim-Chalmers-merger-acquisition.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2427953340","pubTimestamp":1713139202,"sourceInfo":{"source_id":"smallcap_stock","name":"Small Caps"},"weMediaInfo":null,"summary":"Competition is vital for all Australians that want to enjoy fair prices and good quality goods and services – which is almost all of us.Which is why the beefing up of the merger laws by Treasurer Jim Chalmers is such a big deal in a country that is absolutely dominated by industries in which a couple of big companies are so powerful they form an effective oligopoly.Arguably, this massive ramping up of Australia’s merger laws – the biggest in 50 years – could stand as the biggest economic reform brought in by the Albanese Government, which has admittedly been fairly shy about pursuing major changes during its first term.However, when the new system begins in the middle of 2026 it will greatly increase the power of the ACCC to stop mergers which it considers will decrease competition.However, there could be some losers under the new system, with share market investors who own shares in companies prone to takeover particularly vulnerable.Similarly, shareholders in dominant companies might","collect":0,"end_time":0,"defaultTopTitle":"smallcaps.com.au","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK7511":"ESG概念","BK7501":"新冠治疗股","TAH.AU":"TABCORP HOLDINGS LTD","WOW.AU":"WOOLWORTHS GROUP LTD","TPG.AU":"TPG TELECOM LTD","TCL.AU":"TRANSURBAN GROUP","BK7078":"赌场与赌博","BK7040":"食品零售","BK7042":"综合电信业务","BK7082":"大卖场与超市","COL.AU":"COLES GROUP LTD","BK7090":"公路与铁路"},"translate_title":"新的合并法对企业和投资者来说是一把双刃剑","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"COL.AU":1,"TAH.AU":1,"TCL.AU":1,"TPG.AU":1,"WOW.AU":1},"content_text":"Competition is vital for all Australians that want to enjoy fair prices and good quality goods and services – which is almost all of us.\nWhich is why the beefing up of the merger laws by Treasurer Jim Chalmers is such a big deal in a country that is absolutely dominated by industries in which a couple of big companies are so powerful they form an effective oligopoly.\nArguably, this massive ramping up of Australia’s merger laws – the biggest in 50 years – could stand as the biggest economic reform brought in by the Albanese Government, which has admittedly been fairly shy about pursuing major changes during its first term.\nACCC to get greater powers to halt mergers\nIn broad terms the changes will give the Australian Competition and Consumer Commission (ACCC) much greater power to block anti-competitive mergers which should be good news but there are some problems and one big exception for share market investors and some small business owners, which I will get to later.\nThe biggest problem is that there is nothing in these changes that will quickly increase competition in those important industries that are already dominated by a couple of big players such as supermarkets, telcos, banks, airlines, insurers and many other industries.\nThat is because ACCC chairwoman Gina Cass-Gottlieb got most of what she asked for from Dr Chalmers except for the power to mandate the break up of existing dominant market players.\nHowever, when the new system begins in the middle of 2026 it will greatly increase the power of the ACCC to stop mergers which it considers will decrease competition.\nThese might be a big company snapping up a promising minnow to retain its margins and profitability or own a promising new technology or even creeping small acquisitions which over time allow a company to increase its pricing power within an industry.\nChair knows exactly how the merger game works\nInterestingly, because ACCC chairwoman Gina Cass-Gottlieb is an experienced corporate lawyer who was highly successful in fighting on behalf of merging companies, her granted wish list should be quite successful in blocking more mergers.\nHowever, there could be some losers under the new system, with share market investors who own shares in companies prone to takeover particularly vulnerable.\nShareholders in target companies could be disappointed\nSome of the acquisitions that have gone ahead in recent years – such as the $11 billion Tabcorp (ASX: TAH)-Tatts Group merger in 2017, the $15 billion TPG Telecom (ASX: TPG) and Vodafone Hutchison merger in 2020 or the purchase of EastLink by Transurban (ASX: TCL) in 2023 – may struggle in the new environment.\nIf you were a shareholder in one of the target companies, you can only imagine the chilling effect such intervention might have on the share price, particularly if other alternative suitors are nowhere near as keen to buy your company.\nSimilarly, shareholders in dominant companies might have to put up with lower profits if new competitors that would once have been snapped up are instead allowed to grow, reducing profits due to increased competition.\nSmall businesses could be hit as well\nEven small business owners might be impacted, with one of the examples of a creeping acquisition given by Cass-Gottlieb being the private equity-backed expansion of PETStock, which involved numerous acquisitions of small stores and chains that were never notified to the ACCC but still resulted in the formation of the second-largest pet store chain in the country.\nStopping that sort of consolidation is probably a great idea for competition but not such a great thing if you own a small pet store and want to sell it for a good price.\nAll told, improving competition is a worthwhile aim even if it can disadvantage some groups but the takeaway message is don’t expect the cost of living to suddenly come down due to rampaging competitive price cuts.\nThe new laws are still a long way off and even when they arrive, Coles (ASX: COL) and Woolworths (ASX: WOW) are not going to suddenly start making it easy for new competitors to start emerging.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; 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