Australia’s consumer watchdog has been pushing for stronger rules so it can prevent companies from joining forces if there’s a risk firms will then gain too much market power.

Excessive market concentration can lead to higher prices for consumers and weigh on productivity, the Australian Competition and Consumer Commission says.

Treasurer Jim Chalmers and Assistant Minister for Competition Andrew Leigh are also wary merger rules are “too permissive” and are “allowing some mergers that don’t deliver benefits to consumers, workers and the wider economy”.

Yet the Treasury consultation paper into possible reforms released on Monday nodded to the benefits of mergers, with many of these deals allowing firms to achieve economies of scale and diversify risk.

“Ideally, merger control regimes would target those mergers that are anti-competitive and allow mergers that are pro-competitive or benign to proceed,” the Treasury paper said.

Several possible pathways for reform were fleshed out in the paper, including the ACCC’s preferred tweaks.

The consumer watchdog wants mandatory notification and approval of upcoming mergers, with some firms thought to be pushing the boundaries of the voluntary set up and offering up incomplete, incorrect and late information.

The ACCC also wants the test of an anti-competitive merger to be bolstered so it can prevent the likes of “creeping acquisitions”, which is where a company makes multiple smaller acquisitions that are problematic in concert.

Several other models for notifying mergers, test whether a merger is likely to substantially lessen competition, and the body responsible for making decisions on deals were outlined in the paper.

Some ideas were borrowed from places such as the United States, Canada, the United Kingdom and New Zealand, and not all proposed options were as stringent as what the ACCC has proposed.

For example, on notification, the government has outlined a mandatory lodgement option where instead of the ACCC making the call, the watchdog would need to prove to the Federal Court that the merger would likely be anti-competitive.

Dr Chalmers said many countries were reviewing their merger rules to reflect concerns around highly concentrated industries, particularly in the digital sphere.

“Academic research has found many top firms are growing their market share, and businesses at the top of their industries are often remaining there for longer,” he said.

“Other research suggests markups have risen in some sectors while new entrant competition has fallen.”

The arrival of new firms has typically led to lower prices for mobile phone plans, home loan interest rates, and petrol, he said.

“There are concerns that increasingly these kinds of disruptive firms are being acquired by larger incumbent businesses in a way that harms competition.”