The Government has introduced the Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024 (Bill) to establish a mandatory merger control regime from 1 January 2026. To its credit, the Government has listened to market feedback and the proposed regime is significantly more workable than the one set out in exposure draft legislation earlier this year.
We take a look at five key issues arising from the Bill and what businesses can expect as the new regime takes effect from 1 January 2026.
1. Greater clarity on transactions covered by the new regime
The regime will apply to acquisitions of shares or assets (which includes certain interests in land and intellectual property rights). Share acquisitions will be caught only if they confer “control” of a target within the meaning of the Corporations Act 2001 (Cth) – i.e., the ability to determine the outcome of decisions regarding the target’s financial and operating policies – which properly aligns competition and corporations legislation.
2. Notification thresholds are simpler than previously proposed, but still low
There will be two “core” monetary thresholds for the mandatory notification of deals to the Australian Competition and Consumer Commission (ACCC).
- First, notification will be required if the combined Australian turnover of the parties is over $200 million, and either the target has Australian turnover of over $50 million or the global value of the transaction is over $250 million.
- Second, for large acquirers, notification will be required if the acquirer has Australian turnover of over $500 million and the target has Australian turnover of over $10 million.
Serial or “creeping” acquisitions are handled with cumulative thresholds under which a notification is required if the Australian turnover from acquisitions by the parties in the preceding three-year period, and involving the same or substitutable goods or services, is over $50 million (or $10 million for large acquirers). The Government had also previously floated separate market-share-based notification thresholds that would have been difficult to apply in practice and would have resulted in significant uncertainty. Thankfully, those thresholds have been omitted.
3. There will be a regulatory dragnet for private market transactions
Buried somewhat in the Government’s announcements and subsequent press coverage is an additional notification threshold for acquisitions of interests above 20% in any unlisted or private company if a merger party has Australian turnover of more than $200 million. If implemented, this would unnecessarily capture a very large volume of transactions. There will be further consultation on this aspect, but it seems unlikely to be abandoned: the Government has disclosed that it has been included at the request of the ACCC Chair to bring greater transparency to private markets. Given the impracticality of the ACCC reviewing all these deals in any detail, a possible outcome is that the notification requirement remains but a foreshadowed notification “waiver” system is used by the ACCC to quickly dispense with transactions that are obviously unproblematic.
4. The ACCC will have significant influence over review timelines
The legislated timelines will generally be as previously proposed: 30 working days for “Phase 1” reviews (with a 15-working-day “fast track” for straightforward cases) and a further 90 working days for more in-depth “Phase 2” reviews. However, we previously reported concerns that the ACCC would, in practice, have significant scope to control and extend its review timelines, including by determining when a notification is “complete” (and therefore the point at which the timeline begins to run) or by issuing compulsory information-gathering notices that “stop the clock”. Those concerns remain. For its part, the ACCC has said that it intends to determine 80% of notified transactions within 15-20 working days, although that does not take into account any pre-lodgment engagement required for the parties to have confidence that a notification is “complete” at the outset of the process.
5. Sensible transitional arrangements will apply
Finally, notification under the new regime will not be necessary for transactions that are cleared by the ACCC before 1 January 2026 under the existing informal clearance process, provided they are then completed within 12 months of the ACCC’s decision. However, if the merger parties have sought informal clearance for a transaction but have not yet obtained that clearance by 1 January 2026, then it appears that it will need to be notified again under the new regime. To account for this possibility of being stranded under the existing regime, merger parties can choose to make a voluntary notification under the new regime from 1 July 2025.
Looking ahead
The Government will consult further on review timelines, thresholds, other process issues and fees over the remainder of 2024. The ACCC will then consult on its process and substantive analytical guidelines for the new regime in early 2025. For detailed advice tailored to your specific needs, contact Partner Alistair Newton.
