Merger control Bill improves some elements of exposure draft, but concerns for business remain

This morning Treasurer Jim Chalmers introduced new legislation designed to overhaul Australia's merger control regime which will come into effect from 1 January 2026 (with voluntary compliance optional from 1 July 2025). This follows consultation on the exposure draft bill and proposed thresholds earlier this year. We're still reading the bill in detail, but our immediate reactions are:

• The removal of a concentration-based threshold and reliance on monetary thresholds is an improvement for businesses – monetary thresholds are substantially more objective and will make notification obligations more certain.
• However, the discretion of the Government to target specific mergers means that the goal posts could constantly be moving with little notice.
• The proposal to require notification of all acquisitions over 20% of private companies where one party has turnover over $200 million is problematic. Requiring large private companies to notify small minority stakes where there are no competitive overlaps is at odds with claims of a "more targeted" regime.
• It is reassuring that the thresholds will be reviewed after 12 months – it's almost inevitable that there will be teething problems. However, thresholds will be made by regulation not legislation, making them easier to amend, and Chalmers this morning stated that Government will rely "very very heavily" on advice from the ACCC about the thresholds.
• The 30 day Phase I review period is an improvement on the current approach where timelines are very uncertain and seem to be getting longer and longer. But whether timelines are actually shorter in practice will depend on how quickly that clock starts, and how often exemptions to "stop the clock" are made.

Key elements of package

The Treasurer has said that the package of reforms introduces five key changes:

1. Faster: 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 ACCC says around 80% of mergers will be approved within 15-20 business days.
2. Stronger: A mandatory notification system and empowering the ACCC as the decision maker on all mergers, which the Treasurer says will make the regime stronger.
3. Simpler: in place of the current 3 streams, introducing a single streamlined path to approval that removes duplication and standardises notification requirements for mergers.
4. Targeted: 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.
5. Transparent: the merger regime will be more transparent, by (1) ensuring the ACCC has better visibility of merger activity and (2) creating a public register of all mergers and acquisitions notified to the ACCC to promote this transparency and accountability.

Whether the regime achieves these Faster, Stronger, Simpler, Targeted and Transparent objectives will be heavily dependent on how the ACCC administers it. If, like in other jurisdictions, there is a lengthy period of consultation with the ACCC before filing, and RFIs that stop the clock, the process could take a lot longer than 30 days (or 90 days for a more complex deal).

The detail that the ACCC will require the parties to submit, and the processes it will follow, will be crucial, including waivers for mergers that do not raise any possible concerns.

There is a new test (the Stronger objective) and transparency as to how the ACCC decides whether a merger creates, strengthens or entrenches substantial market power will be really important. The requirement of a public register of all deals notified by the ACCC is welcome, but its effectiveness as an indication of how the ACCC is considering the new test will depend on the detail that is included in the register.

The regime also allows discretion for the Australian Competition Tribunal to permit parties to provide new information if relevant to the ACCC determination, and they didn't have a reasonable opportunity to make submissions in the ACCC's review.

Merger thresholds now simpler – but with more exceptions

The package of reforms reduces the complexity of the previously proposed thresholds and abandons the idea of market share or share of supply thresholds, which is better than anticipated. The thresholds are now:

1. any merger 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. 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 three-year period is at least $50 million will be captured, or $10 million if a very large business is involved.

The Government will also have the discretion to designate additional thresholds. It will require every supermarket merger to be notified to the ACCC. Other sectors that might be designated include fuel, liquor and oncology‑radiology. The reforms will apply to land acquisitions, but those involving residential property development and certain commercial property acquisitions won’t be included to avoid clogging up the system with simple land purchases (unless they are captured by additional targeted notification requirements).

The process of designation, and when a designation will take effect, could have ramifications for transaction planning and timing. The operation of the thresholds and designation process will really only be tested once implemented, and unforeseen issues are almost inevitable, so sensibly, the thresholds will be reviewed after 12 months.

Control changes which could clog up the system

The package includes improvements to the control provisions in the legislation itself. The reforms focus on mergers that give rise to the capacity to control or influence the competitive behaviour of the target business, but the control provisions in the consultation draft were unworkable, particularly for some public company M&A, and these have been amended in line with the Corporations Act meaning of "control".

However, on the advice of the ACCC Chair, the Government intends to get the ACCC to review purchases of an interest above 20% in an unlisted or private company, if one of the companies involved in the deal has turnover more than $200 million. This is intended to lift the level of scrutiny and transparency for private markets transactions, and to give the ACCC the ability to analyse changes of control in private companies to ensure negative competition effects are avoided and to scrutinise these deals in more detail.

This aspect of the reform package is contrary to the Faster, Stronger, Simpler objectives of the new regime. It would appear to cover any private company acquisition of a 20% interest if just one of the parties has a turnover of more than $200 million (which unlike the thresholds does not seem to be limited to Australian turnover), even where there are no overlaps or vertical relationships. On its face this will clog up the system with mergers that have no prospect of harming competition.

The details of the new merger clearance regime

Mandatory and suspensory regime

The amendments replace the existing voluntary notification regime with a mandatory and suspensory administrative system. Businesses will now be legally required to notify the ACCC and receive clearance before completing a transaction that triggers specified thresholds. Acquisitions that are illegally put into effect will be rendered void and substantial penalties may be ordered by the Federal Court for failure to notify and/or early completion.

Types of transactions caught

The regime applies to acquisitions of shares or assets. There is an exemption where the acquisition of shares in the capital of a body corporate does not result in the acquisition of control that is largely aligned with the concept of control in section 50AA of the Corporations Act. There are also some additional exemptions including in relation to land, internal restructures and acquisitions by Government authorities.

Thresholds for notification

There are three notification thresholds:

• any merger 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.
• 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.
• 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 three-year period is at least $50 million will be captured, or $10 million if a very large business is involved.

Parties can seek a notification waiver from the ACCC to confirm that an acquisition is not required to be notified.

Special sectors

The Minister can determine specific classes of acquisitions that must be notified, even if the notification thresholds are not satisfied.

The Government has announced the intention to initially use this power to require notification of:

• every supermarket merger; and
• acquisitions of an interest above 20% in an unlisted or private company, if one of the companies involved in the deal has turnover more than $200 million.

Sectors that might be designated include fuel, liquor and oncology‑radiology.

Who is responsible for notifying

The "principal party to an acquisition" (typically the acquirer) is legally responsible for a breach, but notification by any one of the parties will be sufficient to satisfy the notification obligation./p>

Notification form and content

There will be a notification form and upfront information requirements. This is still to be developed.

Substantive test for clearance

The ACCC must grant clearance unless it is satisfied that the acquisition would have the effect, or be likely to have the effect, of substantially lessening competition. The legislation also makes it clear that a substantial lessening of competition can be constituted by the creation, strengthening or entrenching of substantial market power. The ACCC may treat the effect of the acquisition as being the combined effect of the acquisition as well as acquisitions by at least one of the parties that involve competing goods or services in the three years prior to the notification date.

If unconditional clearance isn't granted, there is an option for parties to make an application for clearance on the basis that public benefits of the transaction outweigh the harms.

Review timeline

The review timeline will start on the effective notification date, which will be confirmed by the ACCC once it has received complete information. It is unclear whether in practice there will be extensive pre-notification discussions with the ACCC.

There is a 30-business day review period for Phase I (with a fast track 15 business day option if no concerns are raise). There will be a further 90 business day review period for transactions requiring a more in-depth Phase II review. If a decision isn't made within the review period, clearance is deemed. Businesses should also be aware that they will have a 12-month period to complete an acquisition after receipt of clearance.

Interaction with FDI/ national security reviews

There is no change to FIRB’s regime, and the ACCC will continue to be a consult partner for transactions that are notified to FIRB. We expect that FIRB will continue its practice of waiting for ACCC confirmation that there are no competition concerns before it issues its own approval, even for transactions that fall below the ACCC notification thresholds.

Review of clearance decisions

Limited merits review by the Competition Tribunal is available, based on the information that was available to the ACCC at the time of making its determination (with some exceptions – eg. for new information that was not in existence).

Transitional arrangements

The regime will come into effect on 1 January 2026 and will apply to acquisitions that are put into effect on or after that date. Parties can choose to voluntarily notify under the new regime from 1 July 2025.