Transformative reforms to Australia’s merger laws announced by Treasurer Jim Chalmers – M&A/Private Equity

Treasurer Jim Chalmers has today announced transformative
reforms to Australia’s merger laws. The new merger laws will
mandatorily require companies to notify the Australian Competition
and Consumer Commission (ACCC) of merger transactions above certain
monetary or market share thresholds. These changes will bring
Australia into line with international standards whereby most OECD
countries have a mandatory notification regime to their competition
regulator.

In announcing the changes today, the Treasurer said that market
concentration had trended up in recent decades and that
Australia’s existing merger review laws are no longer fit for
purpose. He said that some mergers can cause serious economic harm
and strangle innovation, productivity and reduce the choice
available for consumers. The new laws he said will result in a
stronger, simpler, targeted, faster and more transparent system for
the assessment of mergers.

The Chair of the ACCC publicly stated today that the ACCC
welcomes and supports the changes and that the reforms would
deliver the outcomes and the objectives that the ACCC had long
argued for.

Stronger

Under the current system, merger parties do not need to notify
the ACCC of proposed transactions or to wait for clearance from the
regulator before proceeding to completion. Under the current model,
if the ACCC considers a transaction to be anti- competitive, it
must take action in the Federal Court to prevent the matter
proceeding or to unwind the transaction.

The substantive test will remain essentially the same, namely,
the focus will continue to be on prohibiting mergers or
acquisitions that would result in a substantial lessening of
competition. However, it will be expressly stated in the
legislation that mergers which create, strengthen or entrench a
position of substantial market power in any market are to be
regarded as substantially lessening competition.

Simpler

The ACCC will be responsible for a single merger approval
pathway replacing the present three course voluntary pathways
available under the Competition and Consumer Act 2010 (Cth). All
mergers which exceed the stipulated thresholds will be subject to
the same approval system.

The amount of the monetary thresholds and the size of the market
share thresholds which will trigger the requirements of
notification will be the subject of a further round of consultation
by the Federal Treasury.

The new changes will also seek to prevent companies from
increasing their market share through smaller acquisitions that
fall below the merger notification thresholds by allowing the ACCC
to review the parties’ acquisitions over the last 3 years when
determining whether a merger meets the notification threshold.

Targeted

With parties being required to address clear information
requirements upfront, the ACCC will be able to quickly determine
and approve innocuous mergers from those mergers requiring greater
scrutiny. All merger notifications will require payment of an
assessment fee to the ACCC. The amount of the fee will depend on
the size and complexity of the deal, but are likely to be in the
range of $50,000 to $100,000. An exemption from fees will be
available for small businesses.

Faster

Under the reforms, the ACCC will have 30 working days to approve
mergers that do not raise competition concerns, with the option to
“fast-track” determinations if no concerns are identified
after 15 working days. Where competition concerns are identified,
the ACCC will have a 4 and a half month period in which to
undertake an in-depth assessment.

Transparent

The ACCC will be required to establish and maintain a public
register which will be created for transparency. The register will
set out details of notified mergers and the reasons for
determinations.

Timing

The new laws will come into effect on 1 January 2026. In the
meantime, the current merger clearance system will continue to
run.

Future steps

Federal Treasury will seek consultation in 2024 on the
following:

1. exposure draft legislation to implement these reforms;




2. Merger notification thresholds, including what is a notifiable
   merger;




3. Merger review timelines;




4. Proposed fees;




5. Procedural safeguards; and




6. Penalties which are to apply for non-compliance.

We will continue to keep you informed of these developments.

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guide to the subject matter. Specialist advice should be sought
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