The long-awaited ACCC merger reform was tabled before Australian Parliament yesterday (Thursday 10 October), after being first floated back in April. With this release, the goals and implementation of the reform were revealed, giving transparency on how the future of Australian business mergers will be handled.

The proposed reforms

In a joint statement, Treasurer Chalmers and Andrew Leigh MP, the Assistant Minister for Competition, Charities, and Treasury and Assistant Minister for Employment, said: “Most mergers have genuine economic benefits – allowing businesses to achieve greater economies of scale and scope, helping them to access new resources, technology, and expertise.

“However, they can cause serious economic harm when firms are solely focused on squeezing out competitors to capture a larger percentage of the market.”

Now, these plans have been tabled in Parliament, with a statement outlining exactly what changes will come from these reforms.

“The new merger control regime represents a major change for the ACCC, business and the Australian community. Australia will move from a judicial enforcement model to a primarily administrative regime, with the ACCC as the first instance decision maker on each notified acquisition,” said the ACCC.

“These changes are relevant not just for businesses when they are contemplating a merger, but also for businesses that can be affected by a merger such as suppliers, business customers in the supply chain and rivals. The changes will benefit these business stakeholders by providing greater transparency and opportunity to comment on transactions before the ACCC. It will also provide an avenue for the wider community, including consumers and small businesses, to comment on mergers relevant to them.”

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Chalmers released a statement, claiming the changes are “the biggest reforms to Australia’s merger settings in almost 50 years.”

“This Bill is another big step towards reforming Australia’s merger rules and further boosting competition and productivity in our economy … We understand most mergers have genuine economic benefits and are an important feature of any healthy, open financial system,” he said.

“But some mergers can cause serious economic harm. This can happen when businesses are not interested in improving profitability by lifting productivity. When they’re solely focused on squeezing out competitors to capture a larger percentage of the market. This can strangle innovation, reduce productivity in our economy and punish consumers with reduced choice.”

He continued: “The need for reform is clear. Australia is one of only 3 OECD countries that doesn’t require compulsory notification of mergers. Last year, over 1,400 mergers were recorded, at a value of around $300 billion. Meanwhile, the ACCC looked at an average of 330 mergers a year over the past decade. But we don’t know whether these are the right 330, or the mergers with the greatest potential to cause harm.”

The changes outlined will be rolled out from 1 July 2025 on a voluntary basis, with it becoming mandatory from 1 January 2026.

According to the ACCC, the reforms will reportedly allow for:

• Faster timeframes;
• Greater transparency;
• Clear notification requirements for parties;
• Risk-based approach underpinned by enhanced data and economic analysis;
• Economy-wide competition research and ACCC accountability;
• New analytical and process guidelines;
• Clear path to transition; and
• Improved internal capacity and streamlined processes.

“This legislation will bring our merger system into the 21st century…the legislation will improve our regime in five ways, by making the system faster, stronger, simpler, more targeted, and more transparent,” said Chalmers.

“Approvals will be faster under the new system, with mergers ticked within 30 working days where the ACCC is satisfied they pose no threat to competition. The regime will be stronger thanks to a mandatory notification system and empowering the ACCC as the decision maker on all mergers. The system will be simpler, because we are reducing three streams to a streamlined path to approval that removes duplication and standardises notification requirements for mergers.”

“It will be more targeted, because mergers that create, strengthen, or entrench substantial market power will be identified and stopped while those consistent with our national economic interest will be fast tracked. Finally, the merger regime will be more transparent, by ensuring the ACCC has better visibility of merger activity,” he explained.

“Only mergers above monetary thresholds will need to be notified to the ACCC and be approved before proceeding. The government intends to set these monetary thresholds in regulations following the passage of this Bill.”

Chalmers said there will be three thresholds:

1. Any merger will be looked at if the Australian turnover of the combined businesses is above $200 million, and either the business or assets being acquired has Australian turnover above $50 million or global transaction value above $250 million.
2. The ACCC will look at any merger involving a very large business with Australian turnover more than $500 million buying a smaller business or assets with Australian turnover above $10 million.
3. To target serial acquisitions, 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 3‑year period is at least $50 million will be captured, or $10 million if a very large business is involved.

The changes are intended to help promote competition, which includes helping borrowers find better deals on mortgages and higher interest rates on savings accounts.

“This agenda will help expand choices, lift living standards and grow our economy. It will help ensure that our people, businesses, and industries are beneficiaries of the opportunities before us in the defining decade ahead,” added Chalmers.

Potential challenges and inefficiencies

Responding to the announced changes, Allens partner Jacqueline Downes, who leads the BigLaw firm’s competition, consumer, and regulatory practice, said that the government has “pleasingly” responded to several issues raised by businesses and the legal community during the consultation process.

However, she went on, “there is no doubt that this reform will make the merger clearance process more challenging, and possibly introduce inefficiencies that will hamper business transactions unnecessarily”.

It will be necessary, she mused, to see how the changes are implemented in practice.

Under the proposed legislation, Downes said, the merger approval process remains very complex and is likely to capture a large number of transactions.

“The revised test for control, exempting acquisitions of less than 20 per cent of publicly listed companies and aligning more closely to the control test in the Corporations Act, is welcome. It will however still capture a significant number of transactions unnecessarily,” she posited.

“While the thresholds are yet to be released, according to the Treasurer's statement the government does not appear to have moved much on the financial thresholds, although it has removed the uncertainty of market share thresholds and has introduced a welcome exemption for some property transactions.”

However, she continued, it has also indicated that all acquisitions of more than 20 per cent of a private company by corporations with greater than $200m in revenue will be required to notify.

“In our view, the complexity together with the potential volume of mergers captured raises significant concerns about the ability of the ACCC to review mergers promptly,” she espoused.

Allens is pleased, Downes noted, to see the addition of the ability for the Tribunal to introduce new evidence if the parties haven't had an opportunity to put that before the Commission.

“This is critical for procedural fairness, “she said.

“We also welcome the introduction of a waiver power, which allow for some flexibility that was previously lacking.”

Finally, Downes noted that the transitional arrangements indicate that voluntary notifications under the new regime will start from July next year, with a dual-track regime existing until the end of 2025.

“This means companies need to consider their merger timelines carefully to avoid having to restart the process under the new regime,” she concluded.