ACCC Merger Reform: Release of draft merger assessment guidelines

The ACCC have released further draft guidance for the new merger control regime which takes effect on 1 January 2026, with voluntary notification of transactions available from 1 July 2025.

In case you missed it, you can read our previous alerts in chronological order:

1. Federal Government announces reforms to merger laws (22 April 2024)
2. Proposed New Merger Review Regime: Treasury Releases Consultation Paper (5 September 2024)
3. Follow-Up Alert: Historic Merger Law Reform Passes Parliament (4 December 2024)
4. Changes to Australia’s merger laws – ACCC releases guidelines for new regime (5 March 2025)

Continuing preparation for the new regime, the ACCC are now seeking feedback on the draft merger assessment guidelines (Draft Guidelines), released on 20 March 2025. The Draft Guidelines will replace the current guidelines, originally published in 2008 (Current Guidelines), and are intended to be read in line with the ACCC’s merger process guidelines (yet to be released). The Draft Guidelines describe the analytical framework the ACCC will utilise in assessing acquisitions notified under the new regime.

Importantly, the Draft Guidelines are subject to further update and finalisation following public consultation and we will continue to report on the changes as they are notified by the ACCC.

In summary

The Draft Guidelines follow a similar analytical framework to the current regime and reaffirm that the purpose of a merger review regime is to protect consumers and prevent transaction activity that substantially lessens competition in a marketplace. While the Draft Guidelines largely incorporate and expand upon the ACCC’s current approach to assessing mergers, they represent a shift towards a more data focussed analysis of transactions and markets, and with recognition of modern merger trends.

One of the main purposes of Australia’s merger control regime is to prevent market activity that has the effect of substantially lessening competition. For a merger to be considered likely to substantially lessen competition, a substantial lessening of competition must be more than speculative or a mere possibility, but does not need to be a certainty. It will be sufficient for there to be a real commercial likelihood that the merger will substantially lessen competition. This core principle of merger review remains the same.

Regard will also be given to any countervailing factors or public benefits which may impact competition in the relevant market, for example, consumer power, rivalry enhancing efficiencies and the entry or expansion of rivals.

Substantial lessening of competition: Creating, strengthening or entrenching 

The new regime and Draft Guidelines continue to focus on preventing transactions which have the effect of substantially lessening competition, however the Draft Guidelines provide that substantially lessening competition may also include where market activity results in “creating, strengthening, or entrenching a substantial degree power” in a market, and expressly identifies that this is a clarification to the concept of substantially lessening competition, rather than a shift in meaning or change in scope.

The Explanatory Memorandum for the new regime provides further detail, rationalising that an acquisition may cause an “incremental change in market power” which “may still amount to a substantial lessening of competition, if the acquisition strengthens the acquirer’s market power (that is, their ability to act with a degree of freedom from competitive constraints).”

Serial acquisitions 

The new regime provides the ACCC with the ability to consider previous acquisitions undertaken by an acquirer, specifically within the preceding three years, and their cumulative effect. The Draft Guidelines provide that this will enable the ACCC to assess “any strategic business behaviour and take account of dynamic competition in markets” which may be done via a review of previous and future business plans, incentives for the firms’ acquisition strategy and evidence of the likely impact of a single acquisition and a series of acquisitions on the firms’ market position.

Serial acquisitions and roll-ups which gradually impact upon market power and competition are not directly contemplated under the Current Guidelines and, as outlined in previous alerts, have been identified as an area of focus for merger reform. Under the Draft Guidelines, the ACCC is considering the following competition concerns related to serial acquisitions which have potential to harm consumers and competitors:

• increased market concentration over time, which allows a gradual increase in control over markets, for example, the ability to affect price, service, and quality;
• one competitor owning many brands, giving consumers the perception of choice and making it harder for smaller rivals/entrants to establish a niche;
• reduced competition at different functional levels of a market (ie vertical integration) making it difficult for other market participants to maintain economies of scale;
• reduced competition between chain stores resulting from a purchase by one chain operator of a competing chain store; and
• increased difficulty for smaller or potential competitors to reach efficient scale due to the reduced size of the available market.

In addition to the “creating, strengthening or entrenching” test mentioned above, the serial acquisition element further demonstrates the ACCC’s focus on changes in market power (even where incremental) which have, or may have, the effect of substantially lessening competition.

If the ACCC decides to pre-assess or not oppose a transaction under the informal clearance regime, the business will not require public review where (1) a clearance letter is issued by the ACCC in accordance with new section 189 of the Competition and Consumer Act 2010 (Cth) (Clearance Letter) and (2) the transaction is implemented within 12 months of that Clearance Letter. Otherwise, if the transaction is notifiable and meets the thresholds under the new regime, the parties will need to notify the ACCC in accordance with the new process.

Multi-Sided Platforms

Another element of the Draft Guidelines is the concept of “Multi-Sided Platforms”, which refers to platforms that provide services to two or more distinct customers groups, for example a social media platform that supplies both user and advertisers using the platform to reach its audience, a food delivery app providing to restaurants and customers, or a shopping centre supplying services to both retailers and shoppers.

In assessing a transaction involving a Multi-Sided Platform, the Draft Guidelines provide that the ACCC will treat each side of the platform as a separate market, although still recognising the effect each side has on the other/s. The ACCC’s review of Multi-Sided Platform transactions will include an assessment of:

• the effects of the transaction on each side of the platform;
• incentives that the platform operator has on each side;
• the risk of amplifying market power, for example if interoperability or multi-homing is necessary to compete;
• any conflicts of interest;
• barriers to entry and whether those barriers are increasing;
• the risk of a tipping effect, where one platform is very strong and others are weakened as a result;
• the strength of direct and indirect network effects in relation to the platform, that is, where the value of the product on one side depends on the volume of users on the same or other side.

Killer Acquisitions 

The Draft Guidelines refer to “Killer Acquisitions”, being where one firm acquires another firm that it views as a potential competitor, prior to it developing into a true rival. The ACCC is concerned that such acquisitions may result in the loss of future or dynamic competition in a market, effectively making it harder for potential competitors to enter the market while entrenching market power in the acquirer.

The Draft Guidelines reference the digital industry as an area of concern for “Killer Acquisitions”, noting the need for long term, significant investment by a firm in order to compete. In assessing whether a transaction might be a “Killer Acquisition”, the Draft Guidelines provide that the ACCC will review:

• plans and actions taken to enter or expand in a market;
• past history of entry into related markets;
• financial advantages of entry or expansion;
• the likelihood of one merger party entering or expanding without the merger;
• whether the loss of future competition resulting from the merger equates to a substantial lessening of competition;
• the ability of the incumbent merger party to respond to the threat of entry/expansion by the other merger party

Public benefits

Where the ACCC determines that a proposed merger cannot proceed due to the likelihood of a substantial lessening of competition, or applies conditions to that merger, the merger parties may apply for a determination that there would be a net public benefit resulting from the merger. The ACCC may approve an acquisition on this basis if the ACCC is convinced that in all the circumstances, the acquisition would result in a benefit to the public and that benefit would outweigh the detriment to the public that would or is likely to result from the acquisition.

The ACCC specifies in the Draft Guidelines that, where applying for a determination of a net public benefit, applicants are expected to provide “robust evidence” of their claims regarding benefits and detriments, to enable them to be assessed, by providing details of the data relied upon, methodology used, assumptions and reasoning (and basis for their use). For example:

• if efficiency will be improved, by providing strategic plans, integration plans, management consulting plans, research or other data to support these claims;
• by defining public benefits with some precision, by quantifying the size of benefits and detriments and where this is not possible, providing qualitative support for such benefits and detriments;
• by specifying clearly any assumptions made in modelling benefits; and
• details outlining where future benefits are not achievable in any other way, and any other options for achieving them.

We are here to help 

If you are considering undertaking a transaction in the near future and would like to understand how the new merger approval regime may affect you, please get in touch with our Mergers & Acquisitions Team.