ACCC chair Rod Sims has called for a major merger law overhaul.

Mr Sims current laws allow for anti-competitive takeovers in which large corporations benefit while consumers, small business and the economy bears the cost. 

Speaking at a recent event by the Law Council of Australia, the Australian Competition and Consumer Commission (ACCC) chair said Australia's merger laws are “flawed” and “out of step” internationally.

Mr Sims said the laws support companies that seek for merger or takeover deals to be waived through, and that the regulator is limited in its ability to challenge anti-competitive proposals in court.

“Our lack of success in merger cases has resulted in some problematic acquisitions going ahead,” he said.

“For example, we have seen the number of competitors in rail container freight go from two to one. 

“The threat from the entry of a fourth mobile network operator has been extinguished as a result of the Vodafone/TPG merger, and AGL's acquisition of Macquarie Generation saw higher power prices.”

Mr Sims said the laws have left Australia with some of the most heavily concentrated industries in the world.

“Many markets are dominated by a small number of providers, including banking, supermarkets, mobile telecommunications, internet service provision, energy retailing, gas supply and transport, insurance, pathology services, domestic air travel, internet search and social networking services,” he said.

“Without action, market power in Australia will become further entrenched; and will certainly not reduce.

“Market power is hurting Australians across many walks of life.

“Consumers are paying more than they should for a wide range of goods and services.

“Market power is squeezing the incomes of farmers. For example, chicken growers and dairy farmers have little option but to sell their produce to large buyers with substantial bargaining power. Farmers purchase many of their rural supplies from highly concentrated sellers.

“Small businesses generally are becoming increasingly reliant on a few buyers to access markets for their products and a few sellers for their key inputs. This can damage their innovation and their productivity.

“Many small businesses and farmers are largely reliant on Coles and Woolworths to access grocery shoppers. As recent history has shown us, this power imbalance places small businesses and farmers in particularly precarious positions with consequent damage to our economy.

“In digital markets, we are exchanging access to our personal data and attention for so-called 'free' services, but have little choice, knowledge or control over how our data is being used,” Mr Sims said.

The chief regulator said the concentration of market power is reducing economic growth by hurting productivity and wages.

“Market power can contribute to economic inequality by promoting the interests of the few with power over the interests of many. It also undermines trust in the operation of markets, and encourages wasteful rent-seeking activities to protect monopoly profits.”

Mr Sims said changes must be made. 

“Instead of asking the question of; ‘Why not allow this acquisition?’, our merger control system should be requiring merger parties to convince us or an appeal or review body why the acquisition should be allowed on competition grounds,” he argued.

‘We need a mindset change. Our economy would be better served by more companies deciding to compete rather than to acquire.”