Businesses need to be ready for the biggest overhaul of merger clearance rules in decades 5 min read
The reforms will, according to Dr Chalmers, result in a 'stronger, simpler, faster, more targeted and more transparent' merger regime in Australia. Gina Cass-Gottlieb noted, following the announcement, that the ACCC was 'welcome and supportive [of the] reform' as it would give the ACCC the 'ability to see the mergers that matter…[and] to assess them without threat of completion'
The Federal Treasurer, Dr Jim Chalmers MP, announced today that the Government is moving ahead with its plans to introduce significant changes to Australia's merger clearance rules. In the annual Bannerman Competition Lecture, Dr Chalmers called out a general decline in competition in Australia as a key reason for the merger reforms, specifically noting increases in market concentration in various industries, new anti-competitive dynamics and an increase in merger activity by big firms in Australia.
Treasury has, for the most part, adopted the ACCC's proposals for reform, with a few key departures—notably, no shift in onus will be adopted. These proposals will substantially change the process, timing and cost of Australia's merger clearance regime for merger parties.
In this Insight, we summarise the key aspects of these reforms and explain how they will affect merger and acquisition activity in Australia once adopted. We understand the reforms are expected to come into effect from January 2026.
Key takeaways
- A mandatory, suspensory merger regime will come into effect in Australia on 1 January 2026.
- Businesses should carefully consider the impact of any acquisitions on market power and market concentration prior to this date, as the ACCC's analysis of any mergers post-2026 will likely consider and capture the cumulative effect of any completed transactions in the three years prior.
- Treasury will continue consulting on key aspects of the merger reform ahead of implementation.
What is proposed to change?
| Existing regime | Proposed regime |
| Voluntary: notification is not currently mandatory in Australia. If parties choose not to notify the Australian Competition and Consumer Commission (the ACCC) of a transaction—either via informal clearance application or a formal authorisation application—they do so at their own risk. | Mandatory: this is largely an 'administrative model', with transactions above a certain threshold requiring ACCC approval before they can proceed. If the notification thresholds are met (see below), the person or people acquiring control of the business or assets will be required to notify the ACCC. This will include minority acquisitions that may provide de facto control or the ability to materially influence the target business. |
| Existing regime | Proposed regime |
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There are no minimum asset or turnover thresholds to determine whether parties should seek clearance from the ACCC via the informal regime or the authorisation regime. |
Treasury has indicated that thresholds will be both monetary and based on share of supply or market share, with consultations on appropriate thresholds during 2024. Monetary thresholds: these thresholds will be based on revenue, profit and deal value. In 2023, the ACCC called for merger parties to be required to notify a merger if the acquirer or target has an annual turnover of $400 million or more, or if the global transaction value is $35 million or more. Market share thresholds: these thresholds are being introduced, as we understand it, to capture deals where parties may have lower revenue, but the transaction may still raise concerns from a competition perspective. The ACCC will be required to issue guidance to assist merger parties to determine whether their combined market share is higher than the set threshold. Other targeted notification requirements: the Minister will also have the ability to introduce additional targeted notification obligations in the case of high-risk mergers. Serial / creeping acquisitions: to respond to concerns around 'serial' or 'creeping' acquisitions, all mergers within the preceding three years (by the acquirer or the target) will be aggregated to determine whether a merger meets the notification threshold. This will occur regardless of whether those mergers were previously notified to, or approved by, the ACCC. Call-in powers: The ACCC will not have 'call-in' powers to review acquisitions below these thresholds (as was contemplated in Treasury's consultation paper). The ACCC can, however, investigate transactions below the thresholds for breach of any other relevant provisions of the CCA. Opt in: Informal clearance will not be permitted, but parties may themselves 'opt in' to the process by notifying the ACCC. This may introduce some uncertainty for merger parties (ie should they 'opt in' to the process, even though mandatory filing is not required).
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| Existing regime | Proposed regime |
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Non-suspensory: merger parties are not prevented from completing a transaction while the ACCC is conducting its review. However, the ACCC often seeks undertakings not to do so. To prevent a transaction from closing, the ACCC must apply to court for an injunction restraining merger parties from completing a transaction, or for divestiture orders after a transaction has completed. |
Suspensory: merger parties will be prohibited from completing a transaction until the ACCC (or the Australian Competition Tribunal (Tribunal)) grants clearance. This would apply to:
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| Existing regime (informal clearance regime) | Proposed regime |
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Section 50 of the Competition and Consumer Act 2010 (Cth) (the CCA) prohibits mergers that have the effect, or are likely to have the effect, of substantially lessening competition (the SLC Test). The ACCC applies this test when it assesses applications made under the informal clearance regime. For merger authorisations, the ACCC applies the test under s90(7) of the CCA—the ACCC must be satisfied that either:
The ACCC cannot consider public benefits under the informal regime. |
The SLC Test has been retained, with the clarification that it includes mergers that create, strengthen or entrench substantial market power. Following the ACCC's Phase II determination (see 'Timing' section below), merger parties may seek approval from the ACCC that the merger would result, or be likely to result, in a substantial public benefit that outweighs the anti-competitive detriment of the merger (Public Benefit Test). This process will run consequentially (ie after the competition assessment has been completed). |
| Existing regime | Proposed regime |
| In assessing whether a merger or acquisition is likely to result in a substantial lessening of competition in a market, the ACCC will consider the 'merger factors' set out in s50(3) of the CCA. |
The merger factors in s50(3) of the CCA will be replaced with principles that the ACCC must consider (to the extent possible). At this stage, Treasury has flagged that these principles will likely include considerations such as:
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| Existing regime | Proposed regime |
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Under the informal regime, the onus of proof lies with the ACCC to establish to the court that, on the balance of probabilities, the merger is likely to substantially lessen competition in a market.
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A merger may proceed unless the ACCC reasonably believes it is likely to substantially lessen competition. The ACCC was calling for a shift in onus, whereby merger parties would be required to demonstrate that there will not be a substantial lessening of competition as a result of a proposed transaction. This is one key reform the ACCC proposed that Treasury has decided not to adopt. |
| Existing regime | Proposed regime |
| There is no binding legal effect of the ACCC's decision in relation to a transaction under the informal regime. If it seeks to prohibit a proposed transaction, it has to apply to the Federal Court for an injunction. However, in practice, it is extremely uncommon for the ACCC to re-open a merger matter once it has made a decision. Formal merger authorisation granted by the ACCC provides merger parties with legal immunity from court action for a breach of s50 of the CCA. |
The ACCC will be the primary decision-maker under the proposed new regime. If it grants clearance in relation to a transaction, the merger parties will receive legal 'immunity' to proceed. If the ACCC does not provide clearance, the merger will be prohibited from proceeding (subject to review rights). |
| Existing regime | Proposed regime |
| There is no appeal right from an ACCC decision under the informal regime. However, merger parties may seek a declaration from the Federal Court that their transaction does not substantially lessen competition in any market. This is a de novo decision. Under the authorisation regime, merger parties may apply to the Tribunal for limited merits review of the ACCC's determinations. Alternatively, merger parties may seek judicial review of an ACCC determination in the Federal Court. |
Merger parties will have the following review options:
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| Existing regime | Proposed regime |
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There are no prescribed upfront information requirements under the informal regime—parties can determine the form of filing they provide to the ACCC. After receiving a filing from merger parties, the ACCC can issue parties with voluntary requests for information or compulsory requests for information under s155 of the CCA. Under the formal regime, parties are required to provide:
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There will be prescribed upfront information requirements that merger parties will need to satisfy under the new regime. For mergers that are unlikely to raise competition concerns, merger parties will be required to submit a short form notification filing. By contrast, merger parties will be required to submit a more detailed filing for more complex mergers. Merger parties will not be required to prepare merger filings in a legally admissible form. However, senior executives or directors of merger parties will need to attest that the information provided is true, accurate, complete and correct. The ACCC will consult on the form of notification to be required in 2025. |
| Existing regime | Proposed regime |
| There are no statutory deadlines in the informal regime, although the ACCC does provide some guidance on the timing and sets out a timetable when it decides to conduct a public review. For merger authorisations, the ACCC is required to make a final decision within 90 days of a valid application being lodged. There is also the option to extend this period with written agreement from the applicant. |
ACCC timelines: Dr Chalmers has outlined that the indicative timelines for the ACCC's review will be:
There may be an ability to stop and extend the clock in circumstances where remedies are offered by merger parties, or where information has not been provided to the ACCC promptly, or where the parties and the ACCC have agreed to an extension. Treasury will consult on merger review timelines during the course of 2024. Tribunal timelines: where merger parties appeal to the Tribunal, the Tribunal must make its decision within 90 calendar days, which period can be extended by a further 90 calendar days where necessary. However, there will be an option to fast track the review by the Tribunal to 60 calendar days in some matters. |
| Existing regime | Proposed regime |
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There is no filing fee for informal clearance. |
Merger notifications will need to be accompanied by a fee. The proposed filing fee is expected to be between $50,000-$100,000 for mergers notified to the ACCC, with additional fees for a public benefit review and Tribunal review. It is proposed that there will be an exemption from these fees for small businesses. Treasury will consult on appropriate filing fees during the course of 2024. |
| Existing regime | Proposed regime |
| If merger parties seek a confidential assessment, the details of the proposed merger and the ACCC’s views on it will not be included in the ACCC's mergers register. If the ACCC decides that a public review is required, the ACCC will list the review on its mergers register. However, information that is provided to the ACCC—either by the merger parties or by third parties on a confidential basis—will not be disclosed. |
All mergers considered by the ACCC will be listed on an ACCC public register. This register will provide information regarding each merger, including the names of the merger parties, a short overview of the transaction and the review timeline. Merger parties may still discuss the information to be provided to the ACCC in relation to a transaction on a confidential basis prior to the ACCC's review. However, they will not be able to receive an 'informal view' regarding the proposed transaction. Treasury has not indicated whether merger parties will have full access to ACCC documents in relation to a transaction as merger parties do in some overseas jurisdictions. |
| Existing regime | Proposed regime |
| No penalties for completing a transaction before the ACCC has finalised its review unless it involves cartel conduct. However, if the parties proceed with the transaction without seeking the ACCC's review or before the ACCC has finalised its review, the ACCC may seek remedies from the Federal Court, including pecuniary penalties, divestiture of the shares or assets acquired, or an order that the transaction is void and that monies should be refunded to the vendor. |
Merger parties will face substantial penalties for failing to notify the ACCC of a notifiable merger or for proceeding to complete a merger ahead of the ACCC's decision. The ACCC must seek such penalties in the Federal Court. Any merger, contract, arrangement or understanding related to a merger, that is put into effect and which is not in accordance with the ACCC's determination, will be void. The ACCC will retain its existing powers to apply for remedies in the Federal Court, including pecuniary penalties, divestiture of the shares or assets acquired, or an order that the transaction is void and that monies should be refunded to the vendor. |
How will these reforms affect future transactions?
The reforms the Treasurer is proposing to the merger control regime are likely to have a number of significant impacts on merger parties in Australia.
- More deals are likely to be caught: although Treasury is still to consult on appropriate thresholds, the introduction of financial and market share thresholds is likely to see an increase in the number of deals caught under a mandatory merger regime. Given the ACCC's focus on 'creeping' acquisitions, companies should carefully consider their M&A activity in the period leading up to implementation of the new regime (as the ACCC will likely be taking all deals within the preceding three years into account when considering a merger under the new regime).
- Increase in resources required: requirements that merger parties submit specified information and documentation upfront (ie at the same time the merger filing is lodged) will likely mean a longer lead time on lodging merger filings (as parties will need to collate the required information / documents), an increase in legal costs and additional time / resources being diverted away from the business to the ACCC process.
- Initial uncertainty: due to the substantial changes to the current regime, there is likely to be a significant amount of regulatory and business uncertainty when the new regime is adopted. In particular, thresholds need to be sensible and clear to avoid confusion around notification obligations. Given the subjective complexities around market definition, however, there is likely to be ongoing uncertainty around market share metrics (and whether mandatory notification is required).
- Increased gun-jumping risks: mergers will not be able to be completed until the ACCC has approved a proposed transaction (conditionally or unconditionally). This means businesses will need to be more careful about gun-jumping risks, which may result in penalties being imposed on merger parties.
- Limited appeal rights: the proposed reforms allow for only a limited merits review by the Tribunal of the ACCC's decision. This means parties cannot, except in very limited circumstances, introduce new evidence in a Tribunal process. Limiting the abilities of merging parties to introduce new evidence has the potential to negatively impact merger parties' ability for a fair consideration of the transaction, particularly in circumstances where issues become a focus at a late stage.
What's next?
The Federal Government will release further consultation papers during the course of 2024 and 2025 seeking public input on appropriate merger notification thresholds, merger review timelines, filing fees, procedural safeguards and penalties. You may wish to comment on these proposals and the impact they may have on your business.