Merger reforms passed by Australian Parliament

What you need to know

• Parliament has passed historic reforms that will transform merger clearance in Australia.
• Under the new framework, merger clearance will be both mandatory and suspensory for transactions that exceed specified monetary thresholds. The ACCC will be the primary decision-maker.
• The new regime will commence on 1 January 2026, but will become available on a voluntary basis from 1 July 2025.
• There is significant work ahead for the government, with approximately 23 further legislative instruments required to bring the changes into full effect.
• While Treasury has announced its intended financial thresholds, these are not yet finalised and further consultation is expected as the subordinate legislation is developed.
• The ACCC is expected to release draft process and analytical guidelines in Q1 of 2025.
• Treasury is expected to consult on notification forms in Q1 of 2025.

What you need to do

• Understand the potential impact of the changes on your business, including any plans for growth through acquisition.
• For more complicated transactions taking place in 2025 (particularly those where obtaining informal clearance by 31 December 2025 may be challenging), parties should consider whether to opt-in to the new process on a voluntary basis, once that avenue becomes available on 1 July 2025.
• For parties who are granted informal merger clearance or merger authorisation between 1 July 2025 and 31 December 2025, these mergers must be put into effect within one year, or will need to be re-notified under the new regime.
• Parties to transactions in 2025 should also carefully review their condition precedent clauses, to ensure they adequately address all potential outcomes.

On 28 November 2024, Parliament passed Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024, to introduce a new merger clearance regime in Australia. The bill, which makes significant amendments to the Competition and Consumer Act 2010 (Cth) (CCA), was first introduced into Parliament on 10 October 2024.

The new merger clearance framework is both mandatory and suspensory for transactions which exceed specified monetary thresholds. It will commence on 1 January 2026, with a voluntary transition period commencing from 1 July 2025 (when the current merger authorisation system will be closed).

We summarise the key elements of the new law below. For further details of the new regime, please refer to our earlier article.

Key features of the new regime

• Mandatory. Parties to transactions that exceed specified thresholds (see below) will be required to notify the ACCC of the transaction unless the ACCC has determined that the acquisition does not require notification, before putting it into effect.
• Suspensory. A notifiable acquisition cannot complete without ACCC approval.
• Filing fees. Filing fees are likely to be between $50,000 - $100,000 per transaction, but are yet to be finalised.
• ACCC primary decision-maker; limited review by Tribunal. The ACCC will be the decision-maker, with limited merits review by the Australian Competition Tribunal.
• Public benefit applications considered sequentially. Parties will be able to make a public benefit application to the ACCC only after the conclusion of Phase 2.
• Timelines. The following timelines will apply, but are subject to extensions and clock-stopping:
  • Phase 1: 15-30 business days
  • Phase 2: 90 business days
  • Public benefit application: 50 business days (commencing after conclusion of Phase 2), and
  • Tribunal review: 90 calendar days
• Waivers. A process will be introduced to allow parties to seek a "notification waiver" from the ACCC. Upon application, the ACCC will be able to determine that an acquisition is not required to be notified. Details are not yet available, but Treasury and the ACCC have suggested that relevant consideration on waiver requests will include the likelihood that the acquisition would meet notification thresholds and the likelihood that it would substantially lessen competition.
• Pre-notification discussions. Parties may engage in pre-notification discussions with the ACCC. The ACCC has said it will use these discussions to ascertain the types of data and documents that are available. There is no fixed timeline for this part of the process but, at least initially, it may take some time.
• Economy-wide thresholds. The proposed thresholds will apply economy-wide and are set out below. These are not yet finalised and may be revised.
• Additional thresholds for high-risk acquisitions. Ministerial determination will be used to require certain high-risk acquisitions to be notified according to lower thresholds. Further details are set out below.
• Targeted screening tool. Very few details of this element are currently available but this tool may be used to require notification of acquisitions below the monetary thresholds in high risk / concentrated markets.
• Control. “Control” means the capacity of one entity to determine the outcome of decisions about another entity’s financial and operating policies. Acquisitions that do not confer or change "control" are, in general, not required to be notified. However, Ministerial determination will be used to adjust the scope of this exemption and the government has announced, for example, that it will require acquisitions of a 20% share in unlisted / private companies to be notified (provided monetary thresholds are met). Ministerial determination may also be used to require other transactions be notified, including changes in the type of control from joint to sole, or changes in joint control (again, provided monetary thresholds are met). The detail of these requirements will be set by Ministerial determination.
• "Chapter 6" acquisitions. A carve-out has been created to provide a safe-harbour for acquisitions involving publicly listed companies, widely held (unlisted) companies and listed registered schemes (such as managed investment trusts) that do not result in a person having voting power above 20%. Such transactions will not need to be notified to the ACCC.
• Transparency. Information about notified acquisitions will be published on a public register maintained by the ACCC. This will include the notice stating that a notification is subject to a Phase 2 review, the notice of competition concerns (given in Phase 2) and the ACCC's final determination and reasons. Further consultation is expected to take place in 2025 in relation to the requirements for the ACCC's public register.
• Confidential review. Confidential review will be available for certain transactions involving surprise hostile takeover bids but various conditions apply. Confidential applications will not be listed on the public register for 17 business days.
• Goodwill. Parties must notify the ACCC of restraint or non-compete provisions in business sale contracts to protect goodwill. The ACCC will be able to declare that the goodwill exemption does not apply if the provision is not necessary for the protection of the purchaser in respect of the goodwill of the business – in which case the provisions will be at risk of contravening competition law.
• Land. All land acquisitions meeting the proposed monetary thresholds (see below) must be notified unless they fall within limited exemptions. The exemption will cover land acquisitions in relation to residential property development or any business primarily engaged in buying, selling or leasing property which does not intend to operate a commercial business (other than leasing) on the land. The position regarding notification of entry into leases has not yet been clarified.
• SLC test. In order to oppose a transaction the ACCC must be satisfied, following a Phase 2 review, that the acquisition would, in all the circumstances, have the effect or likely effect of substantially lessening competition (SLC) in any market. The CCA has been amended to provide that the acquisition may have the effect or likely effect of SLC in a market if the acquisition would, in all the circumstances, have the effect or likely effect of creating, strengthening or entrenching a substantial degree of power in the market. While SLC language appears in multiple places in the CCA, this additional language will only apply in the context of an acquisition, not more broadly as originally contemplated. In making its competition assessment, the ACCC may take into account the combined effect of the parties' (and related body corporate's) acquisitions involving the same or substitutable goods or services (including across different geographic areas) in the previous three years.
• Tribunal review. ACCC determinations on acquisitions will be subject to limited merits review by the Australian Competition Tribunal. The Tribunal will review the acquisition based on information before the ACCC in the merger clearance process, although the Tribunal may allow new information to be presented in certain, limited circumstances. Third parties may apply for Tribunal review with prior leave of the Tribunal.
• Penalties. Penalties will apply for failure-to-file (i.e. notify) and gun-jumping (i.e. failure to suspend completion pending the ACCC's decision), consistent with existing penalties for contravention of the CCA. Penalties will also apply for providing false or misleading information. New ACCC surveillance capabilities will monitor for non-compliance with notification requirements.
• Commencement. The new regime will commence from 1 January 2026, but will be available voluntarily from 1 July 2025. Merger authorisation will no longer be available from 1 July 2025. Informal merger clearance will continue until 31 December 2025. If applications for clearance under the informal merger clearance are not determined before 31 December 2025, they will need to be re-notified under the new merger clearance regime. Any transaction cleared between 1 July and 31 December 2025, not completed within 12 months, will need to be re-notified under the new merger clearance regime.

Thresholds

The relevant thresholds are not contained in the bill, but the government has announced its intention regarding them. Mergers will trigger mandatory notification requirements if they reach any of the three monetary limbs (i.e. in the alternative) and there is a material connection to Australia. A target has a material connection to Australia if they are "carrying on a business in Australia" or have plans to carry on a business in Australia.

1. Economy wide monetary threshold

An acquisition is notifiable if:

• combined Australian turnover of merger parties (including acquirer group) is at least $200 million, and
• either the Australian turnover is at least $50 million for each of at least two of the merger parties or the global transaction value is at least $250 million.

OR

2. Very large acquirer threshold

An acquisition is notifiable if:

• acquirer group Australian turnover is at least $500 million, and
• the Australian turnover is at least $10 million for each of at least two of the merger parties.

OR

3. Serial acquisitions thresholds

For medium to large sized mergers an acquisition will be notifiable if:

• combined Australian turnover of merger parties (including acquirer group) is at least $200 million, and
• the cumulative Australian turnover from acquisitions in the same or substitutable goods or services over a 3 year period is at least $50 million

OR

For very large acquirers an acquisition is notifiable if:

• acquirer group Australian turnover is at least $500 million, and
• the cumulative Australian turnover from acquisitions in the same or substitutable goods or services over a 3 year period is at least $10 million.

Acquisitions below $2 million Australian turnover will be excluded from serial acquisition threshold calculations.

Additional notification thresholds: Class determination for "high risk acquisitions"

In addition to the above notification thresholds, an acquisition will be required to be notified to the ACCC if it belongs to a class of acquisitions determined by the Minister. The intention is to use this tool to capture acquisitions that are capable of affecting competition and most likely to harm competition and consumers.

Continuing its focus on the sector, the Government has announced it will use this determination power to require supermarkets to notify the ACCC of every acquisition in the supermarket sector. Other industries that have been flagged and that may also be added to the list of high risk acquisitions with lower thresholds include fuel, liquor and oncology radiology.

Next steps

There is a significant amount of work to be done both by government and by the ACCC in order to have the new regime operational by 1 July 2025, when it will become available for voluntary use.
Matters that still need to be finalised include the targeted notification thresholds, the screening tool, the notification form(s), details of the waiver process, details of information to be included on the public register, the ACCC guidelines and more. Further consultation on these matters is expected from Q1 of 2025.

Want to know more?

• New Australian merger regime introduced into Parliament (11 October 2024)