On 2 February, 2024, Australia’s consumer watchdog, the Australian Competition and Consumer Commission (ACCC), published its second submission[i] to the Australian Government’s Competition Review which is being run by The Treasury.
The ACCC is calling for urgent reforms to Australia’s current laws governing mergers and acquisitions to ensure they are effective in preventing anti-competitive transactions and acquisitions which have the effect of harming consumers and competition – particularly during the current cost of living crisis. In proposing these reforms the ACCC is also seeking to bring existing merger laws in line with the merger regimes of other major, developed economies and follow international best practice.
While the Australian Competition and Consumer Act prohibits the acquisition of shares or assets if the acquisition would have the effect, or be likely to have the effect, of substantially lessening competition in any market[ii], under Australia’s current so-called “informal merger review regime”, it is not mandatory for merger parties to notify the ACCC or seek its approval before proceeding with a merger. Instead, merger parties voluntarily notify the ACCC of their proposed acquisition.
The ACCC’s submission follows the results of research commissioned by the Competition Review Taskforce which provided evidence that, under the current ‘voluntary merger regime’, of the estimated 1000 to1500 mergers which occur in each year in Australia, only about 330 are notified to the ACCC.[iii] This supports the ACCC’s contention that the ACCC “[does] not have the chance to consider how they may harm competition and consumers”[iv] or to oppose the merger on the basis that it is likely to substantially lessen competition.
Reflecting the ACCC’s focus on transactions which are most likely to result in harm, features of the ACCC’s proposed reforms include the following:-
- A mandatory notification of mergers above certain thresholds;
- A requirement to not complete the transaction until approval is granted;
- Recognising that most mergers involve businesses in non-contentious mergers, a waiver process allowing for a “fast-track 20 business day exemption from the requirement to lodge a formal notification”[v]; and
- A new right of review to the Australian Competition Tribunal – which is currently not available under the current informal merger clearance regime.
Disclaimer: This article is not intended to be a substitute for obtaining legal advice.
© Stephens Lawyers & Consultants, 13 February 2024. Authored by Rochina Iannella, Lawyer, Stephens Lawyers & Consultants
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[i] ACCC Media Release, “Evidence backs case for critical merger law reform”, 2 February, 2024: Evidence backs case for critical merger law reform | ACCC
[ii] Section 50 of the Competition and Consumer Act
[iii] Ibid.
[iv] ACCC Chair Gina Cass-Gottlieb, quoted in ACCC Media Release, “Evidence backs case for critical merger law reform”, 2 February, 2024
[v] Ibid.