Merger clearance: exposure draft of thresholds and regulations, plus ACCC guidance on notification forms

Two important pieces of the merger clearance puzzle have been released, with the exposure draft of the regulations now open for consultation, and the ACCC's guidance on the notification forms also now available.

The draft regulations include the new Australian merger notification thresholds, additional requirements for major supermarkets and proposed short-form and long-form versions of the notification forms. The consultation period ends on 2 May 2025.

Merger notification tests

The draft regulations include the proposed notification thresholds which are broadly consistent with those published by the Treasury on 10 October 2024.

In summary, the ACCC must be notified in any of the following circumstances:

1. Acquisitions resulting in larger corporate groups – if the combined GST turnover of the acquirer and target is A$200 million or more and either:

• the business or assets being acquired has a current GST turnover of A$50 million or more; or

• the transaction value is A$250 million or more.

• Acquisitions by very large corporate groups – the acquirer's GST turnover is A$500 million or more and target GST turnover is A$10 million or more.

• Creeping or serial acquisitions – either of:

  1. the combined turnover of the acquirer and target is A$200 million or more and the cumulative GST turnover from acquisitions relating to the same or similar goods or services over the past 3-year period is A$50 million or more; or

  2. the acquirer turnover is A$500 million or more and the cumulative turnover from acquisitions relating to the same or similar goods or services over the past 3-year period is A$10 million or more,

• provided that the acquisition of shares or assets is not less than A$2 million.

  There is no special treatment of joint ventures and the above merger notification tests apply to joint venture arrangements.

  What is meant by GST turnover?

  The "current GST turnover" of an entity is the sum of the values of all the supplies that the entity made or is likely to make in Australia in the past year.

  The assessment of turnover is based on "current GST turnover" on the contract date for the acquisition/merger. If the contract date is 1 July 2025, the GST turnover must be calculated for the period 1 August 2024 to 31 July 2025. "Current GST turnover" must already be reported in a corporation's Business Activity Statements, meaning the information should be readily available.

  Exemptions from ACCC notification

  The draft regulation specifies a number of exemptions, including:

  1. Certain land acquisitions:

     1. Acquisitions made for the purpose of developing residential premises;

     2. Acquisitions by businesses primarily engaged in buying, selling or leasing land, eg property development, where the acquisition is for a purpose other than operating a commercial business on the land.

  2. The draft explanatory statement stipulates that this exemption covers property development activity (for example, property developers acquiring land to carry on their business) and does not exempt a land acquisition in the context of a broader transaction or where the land is being acquired to operate a commercial business.

  3. Acquisitions by an administrator, receiver, receiver and manager, or liquidator.

  4. Wills/Estates: acquisitions which take place solely under a testamentary disposition, intestacy or a right of survivorship under a joint tenancy.

  5. Financial securities: the following types of capital fundraising activities:

     1. rights issues (including accelerated rights issues);

     2. dividend reinvestment or share bonus plans;

     3. underwriting of fundraising; and

     4. buy-backs.

  6. Financing/ lending and financial accommodation: acquisitions of security interests over shares or asserts where:

     1. the interest is acquired in the ordinary course of a person’s business of providing financial accommodation and on ordinary commercial terms; and

     2. the person granting the security interest is not an associate of the holder.

  7. Nominees and other trustees: acquisition will be exempt if the acquirer is a person acting as bare trustee for a beneficiary. The beneficiary must have a relevant interest in the securities arising from a presently enforceable and unconditional right to acquire them.

  8. Exchange-traded derivatives: if, at the time of acquisition, the derivative confers an equitable interest in a share or asset.

  These exemptions are additional to exemptions already set out in legislation (including internal restructures and acquisitions in Chapter 6 entities that do not result a stake of more than 20%).

  Supermarkets – classes of acquisitions requiring notification

  The draft regulations also set out additional notification requirements for the acquisition of supermarket businesses by the major supermarkets (being Coles, Woolworths and each of their connected entities), including any acquisition of a legal or equitable interest in land (in whole or in part and which is not an extension or renewal of a lease) provided that the land meets one of the following size requirements:

  1. for land with a commercial building upon it, the gross lettable area of the building is greater than 700 square metres;

  2. for land that does not have a commercial building upon it, the land is greater than 1,400 square metres.

  3. The ACCC's notification forms and guidance

     The draft regulations also set out proposed notification forms: a 5-page short-form (for acquisitions unlikely to raise competition concerns) and the 10-page long-form for others. The ACCC has also released its provisional guidance on criteria for long-form notifications. Where an acquisition meets any of the following criteria, parties should complete the long form:

     1. Horizontal acquisitions – where the parties supply or potentially supply products or services in the same market and their estimated combined market share post-acquisition is:

        1. ≥40% and the increment resulting from the acquisition is ≥2%; or

        2. between 20% and 40% and the increment resulting from the acquisition is ≥5%.

     2. Vertical acquisitions – where a party to the transaction supplies products or services in a market that is upstream or downstream from a market in which another party to the transaction supplies products or services and either of the following applies:

        1. the party in the upstream market has an estimated market share of ≥30% and the other party has a downstream market share of ≥5%; or

        2. the party in the downstream market has an estimated market share of ≥30% and the other party has an upstream market share of ≥5%.

     3. Conglomerate and portfolio acquisitions – where the parties to the transaction supply "adjacent" or complementary products or services, being the supply of products or services that are not in the same market or in the same supply chain, but are related in some way (eg. they target similar customers, or may be purchased or supplied together in a portfolio or bundle):

        1. one of the parties to the acquisition has an estimated market share of ≥30%.

     Even where an acquisition does not meet any of the criteria listed above, the ACCC proposes that a long form notification may be appropriate in other circumstances, including where the acquisition involves a "vigorous and effective" competitor, a firm developing a significant product, or a firm controlling significant inputs, assets, or data.

Next steps

The incoming merger regime marks a significant shift in regulatory expectations, so it is essential that businesses understand how these changes may affect current and future transactions. We recommend engaging early to navigate the draft regulations, prepare for compliance, and provide feedback during the consultation period. In particular, you should be scrutinising the proposed thresholds.

Please get in touch to understand how the incoming merger regime may apply to your business or your client's business and what steps you should take to ensure compliance. Please also see our merger reforms hub for more information on the new regime.