On 16 April 2014, the ACCC released a fact sheet which outlines the factors it can and cannot take into account in its merger review process. The ACCC identified the following factors as being relevant when deciding whether an acquisition substantially lessens competition:
- whether the acquisition will enable firms in the market to raise prices or reduce product quality (including service and choice) or innovation following the acquisition;
- whether the remaining firms in the market are likely to provide enough competition;
- whether the threat of new firms entering the market is sufficient to stop the acquirer from increasing prices; and
- the impact of the acquisition in question only, not the combined effect of that and other acquisitions by the same firm.
The ACCC considered the following factors were not relevant to its decision:
- the impact of the acquisition on specific competitors;
- fixing existing competition problems. Even if a market is relatively uncompetitive, the ACCC must decide whether the proposed acquisition itself will substantially worsen the state of competition in that market, or prevent a significant pro-competitive development from occurring;
- national interest considerations. The Federal Treasurer, on advice from the Foreign Investment Review Board, decides whether acquisitions by foreign controlled companies are against the national interest; and
- the ‘character’ of a local area and community preferences / concerns regarding acquisitions of local businesses by large chains.
The ACCC also provided further guidance in relation to acquisitions involving local markets. The ACCC noted that it cannot stop a large chain from entering a new market if it will negatively impact local competitors, or solely to protect local businesses, as the objective of the CCA is to protect competition, not competitors. The ACCC also outlined the issues it will consider in assessing whether an acquisition of an independent retailer or a development site by a chain is likely to substantially lessen competition, which include potential benefits to consumers, the impact of the presence of an independent retailer on the market, the existing presence of the chain in the market and the ability of other retailers to enter the local market.