How we got here – the ACCC's push for reform

The ACCC has argued the current voluntary regime is no longer fit for purpose, that problematic deals are not being notified and that merger parties are providing incomplete or inaccurate information.

Reform efforts found support in the current Albanese Government, with the Treasurer announcing a 'Competition Review Taskforce' in November 2023 to examine a range of issues for potential reform. Chief among those issues was a review of the merger control regime.

Snapshot of proposed reform package

On 10 April 2024, the Treasurer announced the government's proposed merger control reform package which promises to deliver a 'faster, stronger and simpler' merger system. The reforms seek to ensure the ACCC is a stronger, expert first instance decision maker. It represents a shift to administrative decision making, rather than judicial enforcement.

The ACCC has not been given everything on its wish list, most notably, the government has not accepted its proposal that the onus in merger reviews be reversed and placed on merger parties.

Next steps and implementation

The changes announced on 10 April 2024 are an in-principle package for merger reform subject to further consultation in 2024 (including draft legislation), with a proposal to put the package before Parliament later in 2024, ahead of a scheduled 1 January 2026 commencement.

Key implications of the merger reforms

The reforms represent a significant shift from the current approval process and will impact the effort, time and costs required to proceed with deals in Australia. Some of the key implications and uncertainties are as follows:

• A mandatory regime with ‘low’ thresholds for notification would pull in deals which would otherwise not be notified, this includes:
  • international transactions with a limited nexus to Australia;
  • domestic deals which do not require FIRB (FDI) review / approval; and
  • deals which fall below the ACCC’s voluntary threshold or where parties would otherwise choose not to notify (including mid-market deals).
• Thresholds based on market concentration metrics create considerable uncertainty for deals where the monetary thresholds are not otherwise met.
• For non-contentious deals over the thresholds, the form / requirements of any fast track notification process will be critical.
• The inability to seek clearance on a confidential basis will have flow-on implications for deal processes, including competitive bid scenarios.
• For deals requiring notification, the amount of upfront information / material to be provided to the ACCC will increase (potentially significantly) and a fee will be payable, increasing the cost, time and effort for parties.
• The regime would formally prevent parties from closing unless and until clearance has been given by the ACCC, aligning the process with the current FIRB position.
• Timelines will provide increased certainty for parties, but clock stoppers / agreed extensions may see timelines extended, and uncertainty re-emerge.

The reach and practical workability of any revised merger control regime will turn heavily on the ‘details’, with many key aspects yet to be worked through. However, the reforms will go some way to bringing Australia closer into step with other equivalent international jurisdictions that already have mandatory regimes in place.

Stay up to date

We will continue to provide updates as these reforms are fleshed out through consultation (including as to the form of amending legislation) as this occurs.

Please contact our Competition team if you would like to discuss these new reforms and the implications for investment and M&A activity for your business.