In this alert, we step through five key takeaways of the new merger laws. As we progress towards the implementation of these reforms, please contact us if you have any queries.
For more information on these changes, please see our previous client alerts here and here.
Five key takeaways
1. Mandatory and suspensory administrative system
From 1 January 2026, a mandatory and suspensory administrative framework will come into effect, where acquisitions meeting the prescribed thresholds must be notified to, and approved by the ACCC before they can be implemented. The failure to notify and obtain approval for a notifiable transaction will render the transaction void and merger parties may incur significant penalties.
2. Merger notification thresholds
The Government announced three proposed alternative monetary thresholds in October 2024. The thresholds are set at a relatively low level that can be expected to capture many transactions and include a threshold directed at identifying serial or creeping acquisitions.
The proposed thresholds are set out in the chart below:
Source: Government response to merger reform consultation dated 10 October 2024
The thresholds will be implemented via subordinate legislation and the Government has indicated that further detail will be consulted on through the development of this subordinate legislation.
In addition, the Minister may determine by legislative instrument, specific classes of acquisitions to be notified. In October 2024, Government announced that it would use this power to require supermarkets to notify the ACCC of every merger in the supermarket sector. Other affected industries could include fuel, liquor, pathology and oncology-radiology. In his address to the Competition Policy for the Modern Economy Conference in November 2024, Assistant Minister Andrew Leigh revealed that the Competition Taskforce is working with the ACCC to develop a new microdata tool to identify 'competition hotspots' and industries where serial acquisitions are prevalent, such as childcare, aged care, medical GPs and dentists.
A notification waiver process will be available for merger parties to apply to the ACCC to relieve them of the obligation to notify an acquisition that would otherwise be required to notified. A low cost-screening tool will be explored to capture acquisitions below the monetary thresholds in select concentrated regions and sector.
3. Timeframes
Statutory timeframes will be imposed on the ACCC to make a final determination:
- Phase 1 – 30 business days
At the Senate Economics Legislation Committee hearing on 30 October 2024, ACCC Chair Gina Cass-Gottlieb noted that the ACCC expected to assess and clear 80% of transactions within 15 to 20 business days.
- Phase 2 – 90 business days
- Public benefit application – 50 business days
- Tribunal review – 90 calendar days
The ACCC will have the ability to 'stop the clock' in certain limited circumstances, including if parties are late to respond to an informal information request or take longer than 10 business days to respond to a section 155 notice.
4. Transitional arrangements
The new mandatory and suspensory system will commence from 1 January 2026, but merger parties may voluntarily notify acquisitions under the new system from 1 July 2025. This is to assist with transitional arrangements. Specifically:
- Merger authorisation applications will no longer be available after 30 June 2025. Informal merger applications will no longer be available after 31 December 2025.
- If informal merger clearance is obtained from the ACCC between 1 July to 31 December 2025, merger parties may rely on this and do not need to re-notify the acquisition provided the transaction is implemented within 12 months.
- However, if informal clearance is not obtained by 31 December 2025, then for notifiable transactions the merger parties will need to re-notify under the new system.
5. Practical considerations
Companies will need to carefully evaluate the impact of the new laws on any proposed further M&A activity, and to consider their ACCC engagement strategy in light of these changes. In particular, deal timelines should be carefully planned during the transitional period to avoid having to restart the process once the new framework comes into effect.
It will also be important to carefully consider key provisions of transaction agreements that will be impacted by these changes such as ACCC conditions precedent and associated obligations of the merger parties, and also any post-completion restraints which will also be subject to ACCC review as part of the new system.
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This alert was prepared with the assistance of Naasha Loopoo.
