Australia to introduce mandatory merger control

White & Case LLP

White & Case LLP

The Australian Treasurer has announced the introduction of a mandatory suspensory merger control regime to come into effect on 1 January 2026. The reforms introduce significant procedural changes, limited appeal rights and greater scrutiny of creeping acquisitions and acquisitions by dominant firms.

On 10 April 2024, the Australian Treasurer announced the details of its proposed reform package for merger laws. The reforms align Australia with most of the world with a mandatory suspensory regime and many of the procedural elements are consistent with key jurisdictions including the European Union and China. Several key details are still to be confirmed, including the nature and level of the filing thresholds, the treatment of minority interests and the scope of the upfront information requirements, which will determine how well the regime operates. In this snapshot, we set out the key features of the Federal Government's proposed reform to be administered by the Australian Competition and Consumer Commission (ACCC), how this compares to key overseas jurisdictions, what is yet to be confirmed and what this means for businesses.

What we currently know

Mandatory suspensory regime: Where a transaction meets certain financial or market share based thresholds, an acquisition of shares or assets cannot complete prior to receiving ACCC approval

Thresholds: The filing thresholds have not yet been determined but will be based on both financial metrics (such as revenue, profitability or transaction value) and market shares in Australia.

Review Timing: The proposed review timing is 30 working days from submission of a ‘complete' application where no competition concerns are identified (Phase 1) and an additional 90 working days (Phase 2) where concerns are raised. There will be an ability for the ACCC to stop the clock. This is in line with other jurisdictions but also gives the ACCC the ability to extend the timeframes in certain circumstances including where remedies need to be considered, by mutual agreement or where information is not provided by merger parties.

Public register: Details of all notified transactions will be made public and the ACCC will publish reasons for its decision. This is a significant shift in transparency as currently the vast majority of transactions are reviewed on a confidential basis.

Appeal process: An appeal of the ACCC's administrative decision to the Australia Competition Tribunal will be available but limited to the material that was before the ACCC, other than clarifying or new information allowed by the Tribunal. Judicial review will be available in the Federal Court, but parties can no longer seek a declaration in the Federal Court that a transaction will not have the effect or likely effect of substantially lessening competition as they could before.

Creeping acquisitions: All mergers within the previous three years by the acquirer or target will be aggregated for the purposes of assessing whether a merger meets the notification thresholds, irrespective of whether those transactions were individually notifiable.

No call in power: The ACCC will not have power to call in a merger, but the ACCC may still investigate below threshold mergers for breach of the CCA.

Penalties for companies and individuals: Penalties apply to the company and individuals responsible for failing to notify a merger. Civil and criminal penalties apply to senior executives or directors of merger parties if information provided to the ACCC is false or misleading. The ACCC can seek to have a merger declared void if information provided to it was not true, accurate, complete or correct.

Competition test: The substantial lessening of competition test will be expanded to include ‘'strengthens or entrenches a position of substantial market power in any market". This is targeted at large firms acquiring small or startup businesses.

How the proposed reforms compare to key antitrust jurisdictions

One of the core arguments in favour of adopting a mandatory suspensory regime was that it aligns Australian with the majority of merger regimes around the world. In particular, the reforms pick up a number of features of the EU and Chinese merger regimes, which are regarded as antitrust heavyweights.

  Australia EU China USA
Mandatory suspensory regime Yes Yes Yes Yes
Thresholds Both monetary and share of supply Monetary Monetary Monetary
Treatment of minority interests To be determined but proposed to be based on an acquisition of control, including de facto control or ability to materially influence Acquisitions of a minority shareholding in a company can amount to a "concentration" if the minority shareholder acquires "control" (possibility to exercise decisive influence) Acquisitions of a minority shareholding in a company can amount to a "concentration" if the minority shareholder acquires "control" (possibility to exercise decisive influence) Transaction can be reportable even if the acquirer does not gain control (subject to exemptions)
Review timetable Phase 1: 30 working days (if simplified procedure 15 working days) Phase 2: 90 working days

Phase 1: 25 working days (extended to 35 working days if remedies are offered)

Sometimes transactions notified under the simplified procedure are cleared in advance of the 25 working day deadline Phase 2: 90 working days (+15 working days if remedies are offered, or + 20 working days if requested by notifying parties or by the European Commission with agreement of the notifying parties)

Phase 1: 30 days (less if notified under the simplified procedure)

Phase 2: 90 days

Initial waiting period: 30 calendar days (applicant can pull and refile)

Second request: 30 days after substantial compliance with the second request for information If DOJ or FTC opposes the transaction, they must commence proceedings

Stop the clock power Yes Yes Yes No
Upfront information requirements Yes Yes Yes Yes
Call in power No It's complicated1 Yes FTC and DOJ may issue civil investigative demands in relation to below threshold transactions however parties are not prohibited from closing
Appeal rights Limited to the Competition Tribunal on substantially the same material that was before the ACCC. Judicial review by the Federal Court Appeal possible to the EU General Court. From the EU General Court points of law may be appealed to the ECJ Administrative review via complaint to the legal department of SAMR or administrative lawsuit to be lodged with the First Middle Court. In practice appeals are rare Appeal is possible
Transparency Details of notified transactions and reasons for decision will be published on the ACCC website Details of notified transactions and Phase 1 and Phase 2 decisions are published Details of transaction and decisions are published The fact of filing is not disclosed unless parties are granted early termination. If merger challenged in Court or approved with conditions, the agency's view of the merger and reasoning is published
Substantive test Substantial lessening of competition, including whether the transaction strengthens or entrenches a position of substantial market power Significant impediment of effective competition in the EU internal market or in a substantial part of it, particularly as a result of the creation or strengthening of a dominant position ("SIEC" test) Significant impediment to effective competition - in particular due to the creation or strengthening of a dominant position Substantially lessen competition or tend to create a monopoly
Ability to take into account public benefits Yes No2 Impact of the merger to public interests may be considered3 No

What key aspects still need to be confirmed?

Consultation will occur around the following:

  • Notification thresholds: The ACCC has previously flagged a transaction value of AUD35 million as an appropriate financial threshold. Market share thresholds may align with the ACCC's current recommendations for seeking informal clearance at 20 percent, but this is to be confirmed.
  • Fees: Filing fees are expected to be around AUD50,000 to ADU100,000 for most transactions. An exemption is proposed to apply to small businesses.
  • Form of application: The extent of information and documents that will be required to make a "complete" notification is to be determined. However, it is clear from the ACCC's previous statements that the approach will be a more rather than less requirement with respect to the provision of information upfront.
  • Penalties: Penalties for a breach of the prohibition against anticompetitive mergers under Competition and Consumer Act 2010 (Cth) are currently significant. The Treasury will consult on appropriate penalties for failure to notify.

What should businesses be thinking about now?

These amendments may seem some time into the future, but the mandatory nature of the regime should be a consideration in any strategies around acquisitions in the next 18 months. In particular, the regime will need to be factored into transactions signing in 2025.

Upfront information requirements are likely to be broad, with the production of board, marketing and strategy documents upon notification.

The consultation phase with Treasury and the ACCC will be important to shape the way forward. Where businesses are the ones who will bear the cost associated with the new regime, feedback into consultations on filing fees, information requirements should be considered.

We will provide further insights as we all digest the new way forward for merger control in Australia and the implications for business.

1 Transactions that do not meet any national thresholds may be called in for review by the European Commission under Article 22 (this power is currently being challenged before the ECJ in Illumina/Grail)
2 The EU Merger Regulation, however, provides the limited possibility for EU Member States to take action to protect their national security or other legitimate interests
3 A merger transaction shall be subject to national security review if it involve the acquisition of domestic enterprises by foreign funded undertakings or other methods which may affect national security
4 At up to: (a) AUD50,000,000; or (b) three times the total value of benefits obtained; or (c) if the court cannot determine the value of any benefit, 30% of turnover.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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