Australia’s transition to a mandatory merger clearance regime: Treasury releases thresholds
Treasury has released its much-waited-for merger notification threshold proposition as a part of Australia’s transition to a mandatory merger clearance regime. The proposed thresholds consider the size of the transaction, the revenue and market share, with the potential for additional thresholds being introduced for specific transactions in various markets.
These thresholds were open for public commentary until 20 September 2024 and submissions are publicly available unless otherwise requested by the submitting party.
For background on Treasury’s Merger Reform paper and draft amendments to the Competition and Consumer Act 2010 (Cth) (CCA), which were released for consultation earlier this year, see our article Update on Australian merger reform: draft legislation published for consultation.
The notification thresholds proposed by Treasury seek to capture transactions that are at risk of having anti-competitive effects or an adverse impact of Australian consumers, as well as including economically significant transactions.
For the new regime to apply, the acquisition must also give the acquirer ‘control’. Control is presumed, where the acquirer holds 20 per cent or more of the voting power in the target post-transaction. This presumption can be rebutted.
The thresholds will be based on either monetary or market concentration considerations and it is proposed that there will be four distinct limbs. Notification will be mandatory where any single limb applies.
The proposed transaction must also have a material connection to Australia.
Monetary thresholds
The following monetary thresholds are proposed:
Limb 1 | Limb 2 | |
|---|---|---|
Combined Australian turnover of merger parties (including acquirer group) is at least $200 million +
| OR | Acquirer group Australian turnover is at least $500 million +
|
Market concentration thresholds
The following market concentration thresholds are proposed:
Limb 1 | Limb 2 | |
|---|---|---|
Combined share of the merger parties is at least 25 per cent + Australian turnover (including acquirer group) is at least $20 million for each of at least two of the merger parties | OR | Combined share of the merger parties is at least 50 per cent + Australian turnover (including acquirer group) is at least $10 million for each of at least two of the merger parties |
Treasury has also suggested that further thresholds for specific sectors and markets will be introduced in the future. The ACCC has indicated that some local markets of concern include groceries, fuel and liquor. Any suggested threshold in this category to which a determination to prevent a transaction is implemented will likely sunset after a period of five years.
From 1 January 2026, the ACCC must be notified of any transactions that fall within the notification thresholds. Businesses will need to have in place thorough planning and financial forecasting to pre-empt whether they will meet the financial and market share percentages qualifying them for the regime.
Time will also need to be allowed for the ACCC determination process and any review if a decision of the ACCC is to be challenged.
As there will be notification fees and the requirement to provide detailed documentation of any purported transactions, it will be important that legal assistance is sought in the early phases of the transaction process to enable a faster determination and avoid delays.
The changes to a mandatory and suspensory notification regime will ultimately require businesses to be more mindful of this evolving regulatory space and the legal implications of non-compliance.
This article was written with the assistance of Rebekah Robins, Law Graduate.
