In a significant development, the proposed merger law reforms flagged in earlier articles have been passed by the Commonwealth Parliament and will become law.
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.
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.
- High-Risk Sector Focus: The Treasurer can designate specific “high-risk” industries and apply tailored notification thresholds. Industries such as supermarkets aged care, medical practices, dentists, childcare have already been identified as likely targets.
For businesses and advisors, this marks a fundamental change in navigating mergers and acquisitions. Parties will need to reassess their regulatory strategies in light of mandatory notification requirements and the ACCC’s greatly expanded review scope.
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. The process for application is anticipated to be as follows:
- Pre notification: Parties are encouraged to have initial discussions with the ACCC prior to notification. The ACCC will no longer provide “informal views” on a proposed merger.
- Phase 1- Initial review: an application for merger clearance will undergo the Phase 1 Initial Review (being a period of 30 business days). If the ACCC does not identify any issues, a fast track determination may be made after 15 business days.
- Phase 2 - In depth review: if determination is not made during Phase 1 and the ACCC considers the acquisition could substantially lessen competition, it may take an addition 90 business days to review. If a Phase 2 remember is proposed by day 90 (from the commencement of review), Phase 2 may be extended by an additional 15 business days. In Phase 2:
- the merger will either be permitted to proceed (with or without conditions); or,
- if the ACCC reasonably believes the merger will have, or is likely to have, the effect of substantially lessening competition (SLC), the transaction may be disallowed.
- Substantial Public Benefits (SPB): Within 21 days of a Phase 2 SLC determination, an applicant can lodge an SPB Application for the ACCC to consider the public benefits of the transaction. This can take up to 50 business days, following which the merger can either be cleared (with or without conditions), or disallowed.
- Tribunal Review: Within a further 7 days, the parties may seek tribunal review. The Tribunal may set aside, vary or affirm the ACCC’s decision.
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.
What's Next?
The ACCC has signalled its commitment to developing detailed guidance for businesses to understand their obligations under the new regime. The ACCC will work closely with key stakeholders and issue draft guidelines to ensure a smooth transition. Stakeholders should monitor these developments closely and prepare for the regime’s commencement, ensuring compliance with notification and clearance requirements.
Implications for Australian mergers and acquisitions
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?
- 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.