RDP 2026-04: Tracking Mergers and Acquisitions Using Australian Administrative Data 4. Serial Acquisitions

While the focus of this paper is on methodologies and the database, below we document two case studies of how the database could be used to better understand M&A activity in Australia, and in turn inform policy. These case studies also provide a valuable cross-check on the data, as they can allow us to consider whether patterns align with what might be expected based on other data sources.

The first of these is to consider ‘serial acquisitions’ (or ‘creeping acquisitions’) where an acquirer makes numerous small acquisitions in the same market over time that may cumulatively lead to a significant increase in market share. Serial acquisitions are an area of increasing focus for regulators, as they can allow an acquirer to avoid review by competition authorities as each individual acquisition is too small to be detected and/or trigger statutory thresholds for notification.^[4] For example, in their submission on merger law reform, the ACCC highlighted serial acquisitions as a key increasing area of concern, and gap in the current mergers regime (ACCC 2024).

Serial acquisitions have been explored extensively in some other advanced economies, but to date there has been relatively limited work in Australia. One notable piece of research is (Hossain, Pham and Islam 2021), which finds that serial acquirers have lower stock returns than single acquirers. But it focuses on a relatively small sub-set of mergers recorded in private sector data.

To consider this issue in the administrative data, use mergers identified under the labour flows and tax consolidated groups (TCG) methods because they are able to link acquirers to targets. We start by looking at some aggregate measures of serial acquisitions. To do this we simply look at how many identified acquisitions each acquirer has over the sample, where we treat multiple acquisitions occurring in the same year as one to limit issues around several entities being acquired as part of the same deal. We can see that around 10 per cent of acquirers have more than one acquisition, with a number having several across the sample (Table 2).

While the aggregate numbers are useful to get a sense of these outcomes, we may be particularly interested in cases where acquisitions are in the same industry, as these cases may be more concerning from a competition dimension by allowing a firm to increase its market share and so gain market power. And even more so where there are several such acquisitions over a number of years.

We create a measure of serial acquisitions as follows. First we use the mergers identified through the labour flows methodology. This is because we can link the acquirer and target under the labour flows method (unlike the ASIC method) and the entity being acquired is likely to be an entity with business operations (as it holds the payrolls of staff, unlike the tax consolidated method where groups of related entities may move together, with some firms having zero turnover). Then we identify potential cases of serial acquisitions by selecting labour flows where:

• the acquiring ABN and target ABN share the same 4-digit ANZSIC class (‘same-industry’)
• the acquirer has made same-industry acquisitions in a single ANZSIC class in at least 3 years during the period 2003 to 2018. These years need not be consecutive.

We find that around 40 per cent of all labour flows satisfy the first criterion above (same-industry), while around 7 per cent satisfy both criteria (same-industry, serial acquisitions).

Table 3 shows the ANZSIC classes (4-digit industries) with the highest incidence of these same-industry, serial acquisitions. Rankings were assigned by counting each year during the period 2003 to 2018 where a serial acquisition occurred, as defined above, and then summing these counts over acquirers. It is interesting that the top four serial acquisition industries are in care and medical services, while supermarkets and some hospitality industries are all high on the list. The ACCC has previously identified grocery retailing and childcare as sectors of concern with regards to serial acquisitions (ACCC 2024).

Unsurprisingly, serial acquires tend to be quite large firms. For example, of the 61 serial acquirers across these top ten ANZSIC classes, around 40 per cent were in the top 10 of their ANZSIC class by turnover in the year of the acquisition. So its seems to be the largest firms in industries who are making these serial acquisitions, reinforcing concerns that they could be being used to increase maker share and market power.

While this provides some initial insights into serial acquisitions, but there are numerous areas that could be explored in the future. For example, to what extent have serial acquisitions actually increased market concentration? What are the characteristics of those being acquired? Do they tend to be more innovative, raising concerns around the potential for ‘killer acquisitions’ aimed at discontinuing a competitors innovative ideas (Cunningham, Ederer and Ma 2021)? And what happens to the workers in these firms?

Footnote

See, for example, (OECD 2023) for a discussion of serial acquisitions, their impacts on competition, and approaches to notification and regulation. [4]