Australia: A trust-busting wind is blowing

As populism continues to sweep through western democracies, Australian regulators and policy makers must tread warily. Pressure for more interventionist competition policies is growing and failure to maintain a dispassionate and rigorous approach could have dire consequences for the country's economic performance and international competitiveness.

The emergence of populist political figures and movements has been a defining feature of the polity in many western countries over the last few years. The policy focus of populist movements is usually outward – on nationalist foreign policies, restrictive immigration policies and protectionist trade policies. However, a more interventionist domestic competition/antitrust policy is often the other side of the same populist coin.

Populist competition/antitrust reform proposals are often rooted in economic hardship or anxiety, which leads voters to see big, prospering businesses as exploitative and benefitting from a rigged system. While this may sometimes be true, it is assumed to be the case in the populist view. However, big is often efficient and well-functioning market economies rely on the incentives created by the profits to be made in success. Competition is also a brutal process in which businesses that are inefficient or do not meet customer demand fail.


The original 'trust buster' US President Teddy Roosevelt, whose administration brought 44 antitrust suits and broke-up monopolies from railways to tobacco, was much less of a populist than is often assumed. Roosevelt generally favoured increased regulation, but was spurred to more aggressive action by popular sentiment opposed to the trusts.

In a similar way, the strong populist streak that characterised the most recent US election cycle featured various proposals, from both parties, for more aggressive antitrust enforcement. Throughout his campaign, Donald Trump railed against the power of Wall Street banks, accused Amazon of having a 'huge antitrust problem', vowed not to approve AT&T's acquisition of Time Warner and threatened to challenge the NBC Universal/Comcast merger which closed in 2011. Interestingly, President Trump's nominations for key Federal Trade Commission and Department of Justice positions suggest a much more conservative, centre-right antitrust enforcement stance. Similarly, on the left, commentators have called for an antitrust 'revolution' and opinion leaders including Senators Bernie Sanders and Elizabeth Warren have called for drastically more vigorous antitrust enforcement, including examination of breaking up powerful corporations in various industries.

In Australia, while such aggressive rhetoric has been rare, competition policy is a perennial political football and there are early signs of this issue worsening. There is a well-established feedback loop linking tabloid newspapers and talkback radio concerns about big business and politicians calling for the Australian Competition & Consumer Commission (ACCC) to 'do something' or 'take action'. Pressure is often sought to be released by Government instructing the ACCC to conduct a review – the most recent example of which was the Government's March 2017 direction to the ACCC to conduct an inquiry into retail electricity prices, following media pressure, criticism from Labor and the Senate crossbench and calls to reregulate the industry. The ACCC also comes under regular knee-jerk criticism for clearing transactions after thorough reviews.

Although not a competition policy issue, the Government's announcement of a levy on Australia's five largest banks as part of the 2017 budget illustrates its free-hand to implement relatively populist policies without resistance (or more likely with support) from Labor or the minor parties.

Clearly, robust competition laws and enforcement are essential. There is also scope for legitimate debate about whether concerns arise from a given transaction and whether enforcement should be more or less aggressive. However, proponents of more populist competition policy often fall into one or more of the following errors:

  • They assume big is bad and that any consolidation is anticompetitive. Mergers are neither pro- nor anti-competitive by default. Some create efficiencies and lead to more dynamic markets and others can lead to increased prices and reduced service levels. On any sensible view, the vast majority of mergers are of the former kind (even of those transactions considered by the ACCC, it clears around 98% unconditionally).
  • They look to competition policy to do more than its core mission of enhancing economic efficiency by promoting competition. Much of the recent commentary has advocated more aggressive enforcement on the basis of claimed benefits for a range of other policy goals. These include fairer labour markets, reduced income inequality, fewer systemic risks from insolvency, protection of small business, expansion of consumer choice or a reduction in the political power of large businesses. However, competition law enforcement is a blunt instrument that, when used to seek to address other policy goals, is likely to result in significant market distortions and dampening of economic activity.
  • They evaluate industries and transactions using a simple numerical analysis that says little about the dynamics of competition and the constraints that will operate upon the merged firm. Observing that there are ten players in one industry but only three in another tells you nothing of use about which is more competitive; neither does the fact that there are more players in the same industry in an overseas market. Competition analysis requires a thorough examination of market structure and dynamics – there is no magic number of competitors required for an industry to be competitive. Some markets, such as those characterised by significant economies of scale or network effects, may be more competitive with fewer competitors.
  • They wrongly assume that markets are becoming inexorably more concentrated and tend to discount new entrants and be too sceptical of the constraint imposed by the threat of entry and innovation. Mergers in innovative, dynamic markets with low barriers entry will rarely be problematic.


Competition policy and enforcement walks a fine line in Australia. Because of our small, trade exposed economy, many domestic industries are necessarily more concentrated than equivalent overseas markets. This makes Australia quite susceptible to the downside risks of a more populist bias in competition policy and enforcement, including the following.

  • First, is the risk from false positives or the ACCC opposing transactions that would not lessen competition, resulting in less efficient markets and reduced international competitiveness. While most ACCC decision-making is open to review in the courts or Competition Tribunal, litigation involves substantial time and cost and is not a viable option for all transactions – whether because a deal cannot withstand the delays involved or the parties lack the financial resources to pursue a challenge. As a result, there are areas in which the ACCC's decision-making is less tethered by the discipline imposed by a potential legal challenge.
  • Secondly, unnecessary or inappropriate legislative reforms or market interventions pose the same risks to economic efficiency as overly restrictive enforcement and also impose substantial compliance costs on business. Armies of lawyers were deployed to respond to the 2007 'Birdsville' predatory pricing prohibition and the 2011 bank price signalling laws – both of which were implemented in the heat of media cycle and are now set to be discarded without a single enforcement action being taken.
  • Third and finally, the more extensive use of the ACCC's considerable investigative and review powers imposes substantial costs on business and is likely to have some chilling effect on decisions to pursue transactions.

Australia has been well-served over the years by regular independent and economically-orientated competition policy reviews (the Swanson, Griffiths, Cooney, Hilmer, Dawson and Harper reviews and by more targeted reviews by the Productivity Commission). These reviews have acted as a critical circuit-breaker to prevent less principled policy proposals becoming law and their recommendations should continue to be respected.

The ACCC itself is rightly lauded (including recently by the World Bank and International Competition Network) for its commitment to both economic rigor in its decision making and to clearly communicating its core economic mission. However, populist pressures appear to be building and it is important that the ACCC and policymakers hold back the tide. Doing so will require continued commitment to thorough and dispassionate economic analysis and to articulating what competition law and policy does, what it does not do (or does not do well) and risks of distorting it to seek to achieve other policy objectives.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Chambers Asia Pacific Awards 2016 Winner – Australia
Client Service Award
Employer of Choice for Gender Equality (WGEA)

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.