ACCC has no issue with common ownership

The Australian Competition and Consumer Commission (ACCC) has not identified any complaints in relation to common ownership adversely affecting competition in the market.

In its submission on the capital concentration and common ownership in Australia enquiry ACCC chair, Rob Sims, said shifting to inhouse investment management and the consolidation of the superannuation industry already led to the concentration of capital.

“In the superannuation sector, this increase in concentration has been further caused by factors including:

  • A shift in recent years for superannuation funds to manage more of their investments ‘inhouse’, as opposed to outsourcing that function to other investment managers. Typically, when superannuation funds outsource their investment management function, they engage a number of investment managers. This may result in the ownership and voting rights of securities being spread across a number of investment managers. In contrast, if a superannuation fund moves its investment management function in-house, the ownership and voting rights of securities becomes consolidated under a single entity (the superannuation fund); and
  • Mergers between superannuation funds, with a key driver of these mergers being to ensure funds have sufficient scale to compete. These mergers have resulted in a decreasing number of superannuation funds holding a growing share of superannuation assets.”
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It was noted that two recent studies found common ownership may have a detrimental effect on competition in certain concentrated sectors such as airlines or retail banking.

“These studies found that in some oligopolistic markets where competitors have shareholders in common, prices may be higher, management incentives may be oriented towards industry performance and not firm performance and collusion may be more likely,” Simms said.

“These findings are potentially concerning in the Australian context where 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 and domestic air travel.”

However, Simms said, those studies had been the subject of critical comment by academics and investors and the conclusion by the ACCC was for no consensus on the impact of common ownership of capital.

“Other studies critique the mechanisms through which institutional investors may seek to influence the actions of competing companies in which they hold an ownership interest,” Simms said.

“Those studies emphasise the heterogeneity of institutional investor interests and the fiduciary duties of company directors to act in the best interests of their companies.

“Overall, there appears to be no consensus in the research on the effects of common ownership on competition.”

The scale of concentrated capital

The submission noted that domestic institutional investors were estimated to own just over half the value of listed Australian equities, while a third was owned by overseas-based institutional investors, and household investors only held 11%.

Simms said the growth of the Australian super system was an important factor behind this increased level of institutional ownership.

“To put that growth into perspective, the value of Australian listed equities owned by [Australian Prudential Regulation Authority] APRA-regulated superannuation funds grew by over 50% in real terms between September 2013 and March 2021,” Simms said.

“The value of Australian listed equities owned by those funds in March 2021 was $467 billion.

“The inflow of money into superannuation funds and the need for that money to be invested has contributed to the increased ownership of publicly listed companies by superannuation funds.”

 




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ACCC another regulator asleep at the wheel as Australia careens into a tree. What about researching the effect that union-mega-super amalgamation has had on taking companies and stocks OUT OF the ASX? Recent bids on Sydney Airport point in case.

How will it benefit all Australians to have these monstrous behemoth funds picking the eyes out of the wider market, effectively reducing access by the wider population unless you're in their fund? The amount of corporate, economic, political and social agenda control that these funds will have (and continue to grow in strength each year) is truly scarey.

Idiots & looneys have an issue about 'big brother' or Bill Gates implanting micro-chips in COVID19 vaccine in order to control our future lifestyles and general wealth levels, but unfortunately never recognise the true threats which are equally insidious but far less 'exciting' to talk about.

Its hard to argue, almost a case now of if you can't beat them, then better to join them.

I thought you were all for capitalism. Seems you want to bring in government control - smacks of socialism. How could you?

Ah Hedware at it again, surely we understand you and your Comrade buddies are against capitalism, thats an evil, no good world.
But if the Unions can control assets off market and with zero ongoing disclosure, cream profits off those assets that are paid for by other people, well then that is a Comrade approved style of capitalism hey Hedware.
Long live the Union rorts and propaganda for the Union bosses to feast on. Stuff the little super fund members who make the top Union dogs rich.
Comrad crony communism at it best hey Hedware

I read an article about 'fuzzy logic' where the mentally inept or the corrupted attempt to tie two unrelated but similar aspects together to make their case.

The authors even mentioned this was a 'go-to' tool of socialists and dictators who only want their version of reality to be the dominant public view.

I see here Heddy, a classic example (as per all your socialist pro-labor pro-union comments).

I'll attempt to shed some light and illuminate the issue for your sheltered darkened little mind.

Capitalism isn't anti-government control, never has been. Only a fool thinks that. In order for capitalism to survive it needs a strong but equitable democratic government in power. This does not mean the same government cannot institute restrictions and controls around either ownership or domination of sectors, ACCC being a classic example. It also doesn't mean that the same form of democratic strong government can't impose other controls if it believes it in the national interests, the review of foreign ownership being point in case.

Attempting to indicate that my comment about stopping IFM & other union run superfunds (aka socialist agenda groups) from gaining control over vital infrastructure and valuable national assets that should remain in the public domain is somehow either anti-capitalism or a socialist statement is laughable. In fact I would even say you have an innate ability to not only create 'oxymoronic logic' (coined that phrase just for you, Hed) but also be self-delusional enough to actually believe it.

Initially I thought you had wrong 'fuzzy logic' given it means completely the opposite to what you intimated. But then I recall your plagiarism of IPA stuff and realised you were just using the fuzzy logic of IPA's stuff.

That said, I do agree with your penultimate paragraph. It's hard to invest in countries that dont meet your test.

But then you let yourself down with your ultimate paragraph. By taking your fuzzy logic to its full extent, that would mean exerting control over private companies and private individuals to that valuable national assets would remain in the public domain. That is just too far for my taste.

However I do believe that industry super fund must be obliged regularly to disclose to their members where the funds are invested. I cannot understand why they have been allowed to get away with this practice. Moreover they should disclose to whom they are giving grants and gifts, but then they are just following the practice of the Federal Government of handing out taxpayers' money to their mates via sports rorts, car park rorts and all the rest.

The ACCC has belled the cat. Many other industry sectors are keeping it awake at night with potential cartel activity, but, the Aust. super sector not one of these.

Conversely, how good is it to see so many mums and dads, low income workers,casuals, and others that might ordinarily be economically excluded from share ownership being able to part own so many great Australian companies and businesses through their super.

Seems on this one Mr Wilson’s committee has itself failed the ‘best financial interests test’ - for taxpayers and super fund members alike!

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