In a significant development, the proposed merger law reforms flagged in an earlier article have been passed by the Commonwealth Parliament and will become law.
For the aged care sector, the reforms are significant given the increasing consolidation of providers. This will not only impact larger portfolio transactions including those involving private equity, but also acquisitions involving larger established providers (both for profit and not for profit) and potentially smaller single site or regional services.
The Treasurer also has the power to designate specific “high-risk” industries and apply tailored notification thresholds. The aged care industry has already been identified as a likely target, alongside supermarkets, medical practices, dentists and childcare.
The new regime will take full effect on 1 January 2026. However, from 1 July 2025, merger parties will have the option to voluntarily notify transactions to the Australian Competition and Consumer Commission (ACCC).
The new laws will capture a much broader range of transactions by comparison to the current voluntary disclosure regime.
Other key features of the new laws include:
- Mandatory Notification: Transactions meeting specific thresholds must be notified to the ACCC.
- Prohibition Without Clearance: Transactions subject to mandatory notification cannot proceed unless explicitly cleared by the ACCC.
- Addressing Serial Acquisitions: Ability to assess smaller, incremental acquisitions that might cumulatively harm competition.
- Increased Transparency: Mandatory publication of reasons for all final merger decisions.
At a glance
Acquisitions that would meet each of the following criteria will require mandatory notification to the ACCC by the acquiring party:
- The target entity must have a material connection to Australia
- The transaction must result in a change of control of the target entity
- The acquisition must meet certain monetary thresholds. The thresholds are yet to be formalised, but Federal Treasurer Dr Jim Chalmers has indicated they will be as follows:
- Any merger where:
- the Australian turnover of the combined businesses is above $200 million; and
- either the business or assets being acquired has (i) Australian turnover above $50 million or (ii) global transaction value above $250 million;
OR
- Any merger involving a very large business with Australian turnover of at least $500 million, buying a smaller business or assets with Australian turnover of at least $10 million;
OR
- For serial acquisitions (a cumulative threshold): all mergers by businesses with combined Australian turnover of:
- more than $200 million, where the cumulative Australian turnover from acquisitions in the same or similar goods or services, over a three-year period is at least $50 million; or
- more than $500 million, where the cumulative Australian turnover from acquisitions in the same or similar goods or services, over a three-year period is at least $10 million.
Certain transactions will be exempt from notification, including:
- where the transaction involves a listed target, if the acquiring party does not acquire a shareholding greater than 20%, or does not increase their shareholding, if already above 20%;
- where the transaction does not result in control of the target entity, including where there is a change of control;
- where there is an internal restructure or reorganisation of related bodies corporate (including trusts or partnerships); or
- where the transaction is an “ordinary business transaction”, not involving land or patents.
The reforms also include the power for the ACCC to waive the notification obligation in respect of a transaction.
A public register
Notified acquisitions will be published by the ACCC on a public “acquisitions register” available on the internet, within one business day from the determination, decision or notification being made. The ACCC will publish a copy of a determination along with a statement of reasons for that determination, a copy of a notice stating that a notification is subject to a Phase 2 review, and details of the notification, including the parties to the transaction, a description of the transaction and the affected products/services. This public register could have important implications for buyers and sellers in confidential bidding processes as well as pre-deal stakeholder management with residents and staff.
Implications for aged care mergers and acquistions
Businesses considering undertaking a transaction in the near future should be cognisant of the new regime and how it might affect those transactions. The new regime will have implications for:
- Transaction documents and conditions precedent – does the transaction need to be subject to an ACCC merger clearance? What will happen if the ACCC disallows the transaction? In aged care, this could impact the continuity of care services if a merger or acquisition is delayed or blocked.
- Confidentiality – what impact will publication on the acquisitions register have on pre-transaction confidentiality?
- Transaction timeframes – whether the notification timelines need to be considered in planning the execution of a transaction.
- Acquisitive businesses – will the transaction trigger the serial acquisitions notification requirement? What other M&A activity has the business undertaken in the previous three years?
- Transaction costs – each application will attract application fees. Whilst the quantum is yet to be finalised, it is expected they will be between $50,000 and $100,000 per transaction, with an exemption for small business.
We will continue to provide updates on the ACCC’s implementation and guidance as they become available, including industry specific information. For further advice or assistance with navigating the new regime, please contact our team.
We are here to help
If you would like to discuss the proposed changes to Australia’s merger laws or how they may affect a transaction, please contact our Mergers and Acquisitions team.