Australian merger control reform proposals set to affect deal?making

Published Date
Dec 5, 2023
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The Australian Treasury has released a paper to begin consultation on potential merger control reform. If implemented, the proposed reforms would transform Australia’s voluntary, non-suspensory merger control system – with the number of notifiable transactions, upfront information requirements, and the risk of regulatory intervention likely to increase.

We provide below our key takeaways and observations, as well as next steps in the consultation process for those considering making a submission.

Key takeaways – reform proposals

  • Merger control reform recommendations seem likely – particularly a shift to a mandatory and suspensory system.
  • Treasury is consulting on potential changes to both the merger control process and test.
  • Merger control process – three options are canvassed:

i) Voluntary but suspensory notification of mergers to the ACCC, with upfront information requirements and ‘call-in’ powers.  The ACCC must be satisfied that the merger would not be likely to substantially lessen competition (SLC), with the ACCC’s decision reviewable by the Competition Tribunal.

ii) Mandatory and suspensory notification of mergers above a threshold to the ACCC, with upfront information requirements. To prevent anti competitive mergers from proceeding, the ACCC would need to take action in the Federal Court.

iii) A mandatory formal clearance regime (the ACCC’s proposal). Compulsory and suspensory notification of mergers above a threshold to the ACCC, with upfront information requirements and ‘call-in’ powers below the threshold where there are competition concerns. The ACCC must be satisfied that the merger would not be likely to SLC, with ACCC decisions reviewable by the Competition Tribunal.

  • Merger control test – three options are canvassed, that could be implemented alone, together, or along with changes to the merger control process:

a) modernising the factors that decision makers must consider when determining if a merger will SLC;

b) prohibiting mergers that entrench, materially increase or extend market power; and

c) allowing consideration of related agreements between parties (such as non-compete agreements or agreements concerning the supply of goods or services post-merger).

The context for reform

Treasury points to three main factors as supporting the case for merger reform:

  • Evidence that it says shows a weakening of competition across many parts of the Australian economy, accompanied by increasing market concentration and mark-ups in many industries.
  • ACCC concerns about the existing voluntary merger control regime, including that:
  • It is skewed towards clearance where there is uncertainty about future market outcomes.
  • It can lead to unhelpful behaviour, such as threats to complete before a review is finalised, failure to notify, and providing insufficient or inaccurate information.
  • Broader concerns (arising globally) that certain types of acquisitions by large firms are not adequately captured by competition laws, such as:
  • Serial small or “creeping” acquisitions.
  • Acquisition of nascent competitors.
  • Expansion into related markets.


Process reform needs to balance costs and benefits, but is likely to be less controversial

More details are needed to assess the benefits and costs of purely procedural changes (such as a shift to a mandatory and suspensory system).  For example, what thresholds will be introduced and in what circumstances could the ACCC ‘call in’ below threshold deals?  These matters will affect:

  • The number of deals that need to be notified and the certainty available to merger parties.
  • ACCC review timelines and whether these can be paused.
  • The type and volume of upfront information required, and whether these requirements (and the review process more broadly) might be truncated for simple matters.
  • The level of transparency provided to merger parties about third party submissions and ACCC views and analysis.

Reforms that seek to skew merger control decisions to a less permissive setting are more controversial

Some of the proposed reforms go beyond process issues and may seek to give the ACCC greater power to intervene and limit merger party appeal rights.  Potential reforms include:

  • Adjusting the applicable test so the decision-maker must be satisfied that the transaction is not likely to SLC.
  • Adjusting the applicable test to prohibit mergers that entrench, materially increase or extend market power.
  • Shifting the appeal setting for all ACCC merger control decisions to limited merits review.

Next steps

Submissions to the consultation paper are due 19 January 2024. The Treasury is seeking feedback on the 24 specific consultation questions in the paper, as well as broad feedback on:

  • Whether Australia’s current merger control regime is effective; that is, whether it readily enables beneficial mergers to proceed while ensuring that mergers which may pose substantial competition risks are blocked.
  • How Australia’s merger control regime could be improved, including feedback on the costs, benefits and any alternatives/variations to the various policy options canvassed in the paper.

This feedback will inform the Taskforce’s advice to Government on the potential direction for merger reform. Once the Government has settled its preferred approach, further consultation will be undertaken.

If you are interested in making a submission to the consultation, we are available to discuss any questions you may have.

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This content was originally published by Allen & Overy before the A&O Shearman merger