Australia: A new chapter in merger control

in short

The Australian Parliament passes the Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024 (“bill”) was issued without any amendments on 28 November 2024, marking a new chapter in merger control in Australia.

The merger law is expected to come into effect on January 1, 2026, and will represent a significant departure from the existing voluntary system. Companies will need to consider these changes in their acquisition strategies, including planning and execution, for local and multi-jurisdictional transactions over the next 12 months.

Both the government and the Australian Competition and Consumer Commission (ACCC) are working hard to prepare for the implementation of the new laws. We expect to publish subsidiary legislation on merger notification thresholds in early 2025, along with the ACCC’s proposed notification forms and new analytical and process guidance.

In this newsletter, we step through five key points of the new merger law. As we implement these changes, please contact us if you have any questions.

For more information about these changes, please see our previous customer alerts here and here.

1. Enforcement and suspension management system

From 1 January 2026, a mandatory and suspended regulatory framework will come into effect and acquisitions that meet prescribed thresholds must be notified and approved by the ACCC before they can be implemented. Failure to notify and obtain approval of a notifiable transaction will render the transaction void and the merging parties may be subject to significant penalties.

2. Merger notification threshold

The government announced three proposed alternative currency thresholds in October 2024. These thresholds are set at relatively low levels expected to capture many transactions and include thresholds designed to identify sequential or incremental acquisitions.

Recommended thresholds are shown in the table below:

Source: Government response to merger reform consultation 10 October 2024

The thresholds will be implemented through subsidiary legislation and the government has said it will negotiate further details through the development of that legislation.

In addition, the Minister may, through legislative instruments, identify the specific categories of acquisitions to be notified. In October 2024, the government announced it would use this power to require supermarkets to notify the ACCC of every merger in the supermarket industry. Other affected industries may include fuel, alcohol, pathology and radiology oncology. In a speech at the Competition Policy in the Modern Economy conference in November 2024, Assistant Minister Andrew Leigh revealed that the Competition Working Group is working with the ACCC to develop a new micro-data tool to identify “competition hotspots” and serial acquisitions Popular industries such as childcare, aged care, general practitioners and dentists.

The merging parties may apply to the ACCC for a notification exemption procedure to relieve themselves of the obligation to notify the acquisition, which would otherwise require notification. A low-cost screening tool will be explored to capture acquisitions below monetary thresholds in specific concentrated regions and industries.

3. Timetable

The ACCC will make a final decision within the statutory time limits:

• Phase 1 – 30 working days

At a Senate Economic Legislation Committee hearing on October 30, 2024, ACCC Chair Gina Cass-Gottlieb stated that the ACCC expected to assess and clear 80% of transactions within 15 to 20 working days.

• Phase 2 – 90 working days
• Public benefit application – 50 working days
• Tribunal review – 90 calendar days

The ACCC will have the ability to “stop the clock” in certain limited circumstances, including when a party is late in responding to an informal information request or takes more than 10 working days to respond to a section 155 notice.

4. Transition arrangements

The new mandatory and moratorium regime will come into effect on January 1, 2026, but merging parties can voluntarily notify acquisitions under the new regime from July 1, 2025. This is to assist with transitional arrangements. Specifically:

• Applications for combined authorization will no longer be available after June 30, 2025. Informal merger applications will no longer be available after December 31, 2025.
• If informal merger clearance from the ACCC is obtained between 1 July and 31 December 2025, the merging parties can rely on this clearance and will not need to re-notify the acquisition as long as the transaction is implemented within 12 months.
• However, if informal permission is not obtained by December 31, 2025, the merging parties will need to re-notify under the new regime for notifiable transactions.

5. Practical considerations

Companies need to carefully assess the impact of the new law on any proposed further M&A activity and consider their ACCC engagement strategies in light of these changes. In particular, transaction timetables should be carefully planned during the transition period to avoid having to restart the process once the new framework comes into effect.

It is also important to carefully consider key terms of the transaction agreement that will be affected by these changes, such as the ACCC’s conditions precedent and related obligations of the merging parties, as well as any post-completion restrictions that will also be subject to review by the ACCC. New system.

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This alert was prepared with the assistance of Naasha Loopoo.