Mergers easier with treaties

COUNTRIES adopting uniform regulatory procedures and offering greater cooperation will make it easier for companies to deal with transnational mergers, says Australian Competition and Consumer Commission chairman, Allan Fels.

Professor Fels said without uniformity across borders, companies could be deterred from potentially beneficial mergers by prohibitive costs and red tape.

At the same time he believes countries must have the right to examine a merger proposal to ensure it will not have a detrimental impact upon that country’s domestic market.

Professor Fels was speaking at the recent Shann memorial lecture in Perth organised in conjunction with the WA Economic Society and the University of WA in which he outlined the role of the ACCC in relation to mergers.

“From a regulatory perspective, it is beneficial to have a strong working relationship with competition agencies in other jurisdictions as this may assist relevant agencies with their own enquiries,” he said.

“One possible solution for greater cooperation between countries could be through a uniform notification procedure for transnational mergers.

“This could result in countries adopting a basic set of questions that the merging parties would need to provide to all relevant competition agencies.

“Information that should be supplied would cover identifying the parties to the merger, a description of the merger, description of the activities of the parties in the relevant country, identifying the markets the merger would impact upon both vertically and horizontally and certain key documents such as contractual documents covering the sale and annual reports for the parties involved.

“A uniform notification procedure would assist the work of the regulator and might also reduce transaction costs for the merging parties by reducing the duplication of regulatory requirements in the different countries.”

Professor Fels said uniform notification system would have added benefits.

“First, it may lead over time, to a gradual harmonisation of merger provisions,” he said.

“Secondly, the information sought is material that would, in any event, need to be prepared for regulators involved in the process.

“This could lead to enhanced co-operation between regulators as they have the same core information to work on.”

Professor Fels said there already was a high level of cooperation between countries even without the uniform provisions although confidentiality requirements often hampered this communication.

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