Investment bankers and lawyers specialising in mergers and acquisitions (M&A) take note. Both Liberal and Labor politicians are hardening their opposition to corporate consolidation.
Josh Frydenberg’s move to kill Hong Kong-based CK Group’s $13 billion bid for east coast gas pipeline owner APA Group is the latest evidence that big M&A deals will be harder to get past Canberra.
The Treasurer’s preliminary decision was ostensibly based on a mix of competition and national security grounds, even though the latter was not officially mentioned.
Opposition leader Bill Shorten backed the government and wondered why the competition regulator had given the green light to the foreign takeover of 56 per cent of the national gas pipeline.
Shorten also raised concerns about media diversity after the Australian Competition and Consumer Commission this week approved the Nine Entertainment takeover of Fairfax Media.
It all comes after Labor’s spokesman for competition, economist Andrew Leigh, last week criticised a lack of competition in health insurance, petrol, domestic airlines, department stores, media, banking, supermarkets, internet service providers and beer.
Leigh noted merger activity had increased five-fold since 1992 to 1960 M&A deals in 2017.
He argues monopoly power has contributed to a lack of competition between firms, driving up prices and depressing wages for workers.
If the election polls are accurate, Leigh, a PhD graduate from Harvard University, could be presiding over competition policy in six months.
A Labor government would give the ACCC more power, avoid an overly permissive approach to mergers and be more circumspect on claims of efficiency when considering anti-competitive conduct.
Meanwhile Prime Minister Scott Morrison has already issued a threat, however improbable, to break up big energy companies and has raised his ire at the big banks during the royal commission.
Labor is questioning the vertical integration of banks and wealth managers, which are already being sold by three of the big four banks.
Announced M&A deal value has hit a seven-year high of $US134.3 billion in Australia so far in 2018, according to Dealogic.
If Canberra has its way, that may be as good as it gets.