Tech industry groups are troubled by the Albanese government’s merger reforms, warning they could lower the investment attractiveness of the local tech sector.
But the view presented by the Tech Council of Australia and Australian Information Industry Association is not shared in the FinTech sector, with its peak body insisting there are fewer concerns for financial firms.
The reforms, announced by Treasurer Jim Chalmers on Wednesday, will require companies to notify the Australian Consumer and Competition Commission if mergers meet particular thresholds. The regulator will charge cost recovery fees for the reviews.
Whether a merger is notifiable will also depend on “all mergers within the previous three years by the acquirer…irrespective of whether those mergers were themselves individually notifiable”.
This is an attempt to address concerns around serial acquisitions – when several small acquisitions do not lessen competition by themselves but do so cumulatively.
Mergers that are considered unlikely to raise competition concerns will have simpler reporting requirements.
Tech Council chief executive Ryan Black is relieved that the reforms are not as stringent as the model first pitched by the ACCC.
Representing members across multinational tech companies, venture capitals firms and startups, Mr Black said the proposed reforms addressed several industry concerns.
“The Tech Council is pleased to see the government respond to industry concerns about the certainty and timing of merger reviews by introducing clear thresholds for mandatory notification, strict timeframes for review, and not proceeding with a call-in power for the ACCC [to look at transactions below the notifiable threshold],” Mr Black said.
“We also welcome the government’s decision to reject the proposal to reverse the onus of proof, which if implemented, would have made Australia a less attractive place to invest, grow and scale a tech company.”
However, he has called on the government to ensure the serial acquisition assessment “doesn’t have the effect of lowering the standard for what is considered to be a substantial lessening of competition”, making it easier to block deals.
This reflects previous concerns that venture capital (VC) investment may flow to other jurisdictions if the reforms make it harder for VC firms to turn a profit through the sale of companies they have invested in.
However, FinTech Australia chief executive Rehan D’Almeida said this is unlikely to play out.
“Most deals to date in fintech have not triggered scrutiny on competition grounds, nor has there been appetite from our major financial institutions to buy out any FinTechs innovating in areas outside of their core expertise,” Mr D’Almeida said.
The FinTech industry is currently seeing “more FinTechs partner with banks as opposed to banks acquiring them”, although Mr D’Almeida noted that this may “change in the future, which means we will keep an eye on this policy as it progresses”.
He also noted that since the “pace of innovation and business is accelerating…[and] major innovation and policy themes in fintech tend to change quarterly”, considering an acquisition made three years ago “may be less relevant to one made today”.
The AIIA’s policy and media general manager Siew Lee Seow said the body – representing multinational ICT businesses, startups, and universities – wants to ensure that “SMEs are not further disadvantaged by the inability to merge to enjoy economies of scale and lower operating costs” following a slowdown in federal government spending.
“Furthermore, a healthy digital ecosystem stems from new ideas having access to international or domestic funding to be scaled up. Some new technologies like AI product development are at this stage,” Ms Seow said.
“We are concerned that disproportionately lengthy process and high ‘cost recovery fees’ against low-risk mergers could cause a slowdown in attracting investments in Australia. We caution against merger reforms that stifle innovative tech businesses.”
She said the industry body is eager to be consulted further on the “risk-based determination of ‘cost recovery fees’, the subject-matter knowledge and experience of the [existing] ACCC merger review committee and the ability to promptly and cost-effectively challenge ACCC decisions”.
The government has set January 1, 2026 as the date that the proposed reforms will come into effect but will hold additional rounds of consultation before then.
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