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ACCC calls for laws to block Facebook and Google eliminating competitors

Mr Sims says the tech giants’ strategy involved scooping up companies that may become major digital players while they are in their infancy stage, eliminating any threat of future competition.

“Arguably, Facebook’s acquisition of Instagram eliminated the threat of a substantial potential competitor,” Mr Sims says, according to an advance copy of the speech.

“If the prospect that the target will become an effective competitor is small, but the potential increase in competition and consumer welfare is large, greater weight should be put on the potential for competition.”

The ACCC is due to finalise its landmark inquiry into the “concentration of market power and the broader impacts of digital platforms” on June 30.

The report is seen as a global test-case for competition regulators seeking tangible action to curtail digital giants’ market power.

Arguably, Facebook’s acquisition of Instagram eliminated the threat of a substantial potential competitor

ACCC chair, Rod Sims

Mr Sims will say his proposal may be viewed as unduly interfering with the incentive for start-up entrepreneurs who may endeavour to one day have their company acquired by a tech giant at a high price. “This perspective appears to be based on a view that large digital platforms are uniquely placed to develop and monetise the innovations of small start-ups,” he will say.

Meanwhile, Mr Sims will dig his heels in on his recent decision to stymie a proposed tie-up between Vodafone Hutchison Australia and TPG Telecom.

Earlier this month, Mr Sims blocked the plan on the basis TPG might still consider rolling out the nation’s fourth mobile network in future, even though the company cancelled its plans in January citing cost pressures and difficulties after the commonwealth government banned its supplier, Chinese giant Huawei.

Mr Sims cited examples in Canada and France that he said displayed “mobile wireless pricing is much lower in regions where there are four players” while “prices are high and stable where there are three players.”

“In the commentary on the TPG-Vodafone, I think there is reflected a belief that the scale or financial strength of a competitor determines their competitiveness. We don’t agree with this.”

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