Key features
The design of a mandatory merger regime for a modern economy involves a number of elements and decision points, and the foreign jurisdictions' experiences are useful in understanding what might change.
First, though, let's take a look at the current regime:
- Filing is not mandatory in Australia. If parties choose not to notify a transaction, they do so at their own risk. To prevent a transaction from closing, the ACCC must apply to court for an order restraining implementation, or for penalties or divestiture orders.
- If a court finds the proposed transaction to lead to a likely substantial lessening of competition (SLC), consequences may include injunctive relief, penalties, divestiture orders or follow-on damages.
- There are options available to parties to obtain comfort that their transaction is not likely to lead to an SLC and that the ACCC will not take action, including informal review, formal merger authorisation or potentially seeking a declaration from the Federal Court.
- There are no minimum asset or turnover thresholds to determine whether parties should pursue these options – rather, it is a question for them to consider whether, in substance, the transaction is likely to lead to an SLC.
- In the ACCC's Merger Guidelines, the regulator recommends that parties notify it when the merger parties' activities overlap in Australia, and the merged entity would have a post-merger market share of greater than 20% as to products or services supplied in Australia. Other factors may also influence if the ACCC conducts an 'own initiative' review of a transaction, including whether a Foreign Investment Review Board filing is made, media reporting, third party complaints, and interactions with overseas regulators that are also reviewing the deal.