With the recent introduction of the Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024 (the Bill), significant changes are on the horizon for Australian competition law. The Bill proposes a mandatory, suspensory merger control system, set to replace the current voluntary regime. Here’s a breakdown of what this means for businesses.

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Key Changes and Timeline

Introduction of the Bill

The Bill introduces a mandatory notification and approval process for mergers, replacing the voluntary “informal clearance” regime. This new system will be effective from 1 January 2026, with transitional changes starting from 1 July 2025.

Notification Requirement

Under the new regime, transactions must be notified to the Australian Competition and Consumer Commission (ACCC) and cannot be completed without ACCC approval. This applies to both direct and indirect acquisitions of shares or assets, subject to specific monetary thresholds.

Thresholds and Exemptions

While the monetary notification thresholds will be formally set out in subordinate legislation, the Treasury has announced changes to the initial thresholds following consultation. The new proposed notification thresholds are as follows:

• Economy-wide threshold

This threshold targets large mergers where the combined merger parties (including the acquirer group) have a combined Australian turnover exceeding $200 million. Additionally, the businesses or assets being acquired must either have an Australian turnover above $50 million or a global transaction value above $250 million.

• Lower thresholds for very large businesses

For very large businesses with an Australian turnover above $500 million, lower thresholds apply. These businesses must notify acquisitions of smaller businesses or assets with an Australian turnover above $10 million.

• Serial acquisitions

To address serial acquisitions, businesses with a combined Australian turnover above $200 million will be subject to a 3-year cumulative threshold. This threshold captures acquisitions totalling $50 million in turnover (or $10 million for very large businesses) within the same or substitutable goods or services.

In addition to these thresholds, the Minister has the authority to mandate notification for certain mergers regardless of the monetary thresholds. For example, the Government has announced its intention to require every merger in the supermarket sector to be notified to the ACCC. The Government is also considering targeted notification requirements for sectors such as fuel, liquor, and oncology and radiology.

This flexibility allows for the capture of specific transactions that may pose competition concerns. Furthermore, a targeted screening tool is being considered to identify acquisitions below the notification thresholds in concentrated regions and sectors.

Specific Exemptions:

Specific exemptions from the new mandatory notification regime are as follows:

• Residential Property Development

Acquisitions involving residential property development are exempt from notification.

• Certain Commercial Property Acquisitions

Some commercial property acquisitions are also exempt. This includes acquisitions by businesses primarily engaged in buying, selling, or leasing property, provided they do not intend to operate a commercial business (other than leasing) on the land.

• Publicly Listed Entities and Widely Held Companies

Acquisitions resulting in up to 20% voting power in these entities are exempt from mandatory notification.

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ACCC’s Role and Review Process

Primary Decision-Maker

The ACCC will be the primary decision-maker for all mergers, with no right for merger parties to have mergers determined by the Federal Court. However, a merits review can be sought through the Australian Competition Tribunal.

Substantial Lessening of Competition

The ACCC must be satisfied that an acquisition would substantially lessen competition. The Bill also includes provisions for considering the cumulative effects of serial acquisitions.

Remedy Proposals

Conditions can be imposed on transactions to address competition concerns, with specific timelines for proposing remedies during the review process.

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Transparency and Timelines

Public Register and Detailed Decisions
The ACCC will maintain a public register of notified mergers, enhancing transparency in the merger review process. This register will list all notified mergers, except for hostile takeovers, which can be reviewed confidentially and listed after 17 business days if the ACCC makes a determination. The ACCC will also publish detailed reasons for its decisions, including material facts and the rationale behind each decision. This ensures that businesses and the public have access to comprehensive information about merger assessments.

Defined Review Timelines
The Bill outlines specific timelines for the review process:

• Phase 1 (Initial Review): 30 business days.
• Fast Track Determination: 15 business days if no concerns are identified.
• Phase 2 (In-Depth Review): 90 business days.
• Applications for review by the Australian Competition Tribunal must be lodged within 14 calendar days for a 90 calendar day review.

Fees

Filing fees will be introduced for all notifiable transactions, with some exceptions for small businesses. These fees are expected to range between $50,000 and $100,000, aligning with comparable jurisdictions overseas. Additional fees will apply for seeking a review by the Competition Tribunal.

Transitional Provisions - Voluntary Notification

Starting from 1 July 2025, businesses can voluntarily notify and opt into the new merger authorisation regime. This allows merger parties to begin using the new system ahead of its mandatory implementation on 1 January 2026. This transitional period is designed to help parties adjust to the new requirements and integrate them into their transaction processes and completion timelines. The ACCC will then undertake initial assessments and make timely determinations once its powers commence on 1 January 2026.

Transactions cleared under the current informal merger regime between 1 July 2025 and 31 December 2025 will be exempt from the new notification requirements, provided the relevant transactions are completed within 12 months of receiving clearance. It is important to note that applications for merger authorisation under the current regime can only be made until 30 June 2025.

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Final Thoughts

Navigating these significant changes in merger control can be complex, but having the right mix of professionals on your team is crucial for your success.

If you are considering a merger or acquisition and would like to discuss how these reforms might impact your plans, please contact us. We would be happy to help you prepare and ensure a smooth transaction under the new regime.