Government releases exposure draft legislation on merger reforms, with impact on future acquisition strategy

The Albanese Government has today released draft legislation to effect its ambitious proposals to introduce a mandatory merger control regime.

The draft laws provide a better understanding of what the process and timeline will look like for merger parties, but key questions remain. Notably – the thresholds that will trigger a notification obligation are not yet set and will be the subject of further consultation later this year. Other matters including filing fees are also subject to further consultation.

The regime will come into effect on 1 January 2026, but parties can voluntarily notify under the new regime from 1 December 2025.

Submissions on the draft legislation are open until 13 August 2024.

What are the key features of the legislation?

• Targeted mandatory notification thresholds which will be set out in regulation and set by the Minister. Thresholds will use metrics such as turnover, transaction value, and market concentration, but will be subject to a separate consultation later this year. The Minister will also be able to set targeted thresholds for “high-risk” acquisitions. In practice this will allow the government to target sectors of interest by setting lower thresholds.
• Suspensory review process with clearer timelines. Consistent with Treasury’s proposal, the draft legislation proposes a 30 business day review period for Phase 1 reviews with a further 90 business day review period for transactions requiring a more in-depth Phase 2 review. There will be a fast-track option in Phase 1 if no concerns are raised after 15 business days.
• ACCC will have stronger powers as an administrative decision-maker. The ACCC will be able to determine whether to clear or block transactions with substantial penalties for failure to notify, completion without clearance, and/or provision of false or misleading information.
• Enhancements to the legal test. The legislation clarifies that a “substantial lessening of competition (SLC)” (the pre-existing legal threshold) can result from creating, strengthening or entrenching substantial market power. In practice this is likely to result in a sharper focus on overall market structure and the acquisitions of firms with large market positions.
• Targeting of serial/creeping acquisitions. All acquisitions by the merger parties within the last three years will be aggregated for the purpose of determining whether the thresholds for notification have been met. The cumulative effect of acquisitions by the parties in the last three years will also form part of the SLC assessment for clearance – even if those earlier acquisitions weren’t notifiable. In practice this means parties will need to consider the actual effects of recent acquisitions when assessing ACCC risk for new deals.
• Deals that would otherwise be prohibited can be cleared on “public benefits” grounds. If the ACCC disallows a merger after a Phase 2 review, parties can make an application for a further 50 business day review of the transaction on public benefits grounds.
• Transparency and procedural fairness mechanisms. A public register of notified acquisitions will be set up, and key information and documents (such as ACCC determinations) will be made public. In Phase 2 reviews, the ACCC will need to disclose to parties the material facts, information and evidence on which its concerns are based and provide a reasonable opportunity for parties to respond.
• Limited merits review to the Competition Tribunal. ACCC determinations will be subject to a limited merits review by the Competition Tribunal, which will be based on the information that was before the ACCC during its review. There will be a fast-track option.
• Transitional arrangements: The regime will come into effect on 1 January 2026, but parties can voluntarily notify under the new regime from 1 December 2025. The current informal review process will continue until 31 December 2025 and the existing merger authorisation process will be closed to new applications from 1 July 2025.

The proposed merger clearance process

A summary of the review process is captured in the diagram below.