A new bill has been introduced to Parliament, which, if passed, will provide the Australian Competition & Consumer Commission (ACCC) with fit for purpose tools targeted at identifying and preventing anti-competitive mergers.
Treasurer Jim Chalmers said in a statement that The Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024 aims to make the merger approval system “faster, stronger, simpler, more targeted and more transparent.”
The ACCC first released proposed merger reforms at the Law Council in 2021. In a submission to the Senate Select Committee on Supermarket Prices in March 2024, the ACCC once again recommended reform of current merger laws, alongside the introduction of an unfair trading practices prohibition and making the Food and Grocery Code of Conduct mandatory. The government announced it would be undertaking merger reform in April.
The new legislation outlines a mandatory notification system for mergers above certain thresholds, with three key thresholds. The ACCC will be the decision maker on approvals, stating it will enhance its economic and data analysis to better inform this process.
- Any merger will be looked at 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.
- The ACCC will look at 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 substitutable goods or services over a 3 year period is at least $50 million will be captured, or $10 million if a very large business is involved.
The thresholds will be reviewed 12 months after coming into effect, to ensure they are working as intended.
The ACCC has outlined its approach in anticipation of the new legislation coming into effect, to reduce uncertainty during the transition. Currently, only a small proportion of the estimated 1000-1500 mergers that occur each year are notified to the ACCC, and around 93 per cent of those that are voluntarily notified are assessed on a confidential basis.
The new system will provide for greater transparency of the mergers the ACCC is reviewing and a more efficient process with clearer timelines for businesses. The organisation expects about 80 per cent of mergers will be cleared within 15 to 20 business days. In comparison, the organisation is currently investigating Sanitarium's proposed merger of Weet-Bix brand with Nestlé’s Uncle Tobys brand Vita Brits wheat biscuits, which is expected to take at least 2 months.
ACCC Chair, Gina Cass-Gottlieb, said the organisation was committed to the implementation of these reforms, if passed by parliament, to ensure that transactions that may adversely affect competition are subject to adequate scrutiny, and to provide a more efficient and transparent process.
“Part of making these reforms a success will be ensuring businesses have clarity on their obligations, the timeframes they can expect, and other key aspects of the process,” Cass-Gottlieb said.
“Our statement of goals is the first step in signalling how we will implement these reforms and outlines what merger parties and stakeholders, including customers and suppliers to merger parties, should expect.”
“The ACCC will take a risk-based approach, with resources prioritised to acquisitions more likely to harm the community,” she said.
Subject to the passage of the legislation, the new regime will come into effect from 1 January 2026 – but will allow for merger parties to start using the new regime on a voluntary basis from 1 July 2025.
The ACCC will consult on and publish guidelines on the transition period to ensure stakeholders are well informed about the options available to them during this period and have open channels available for merger parties to seek guidance.
The ACCC has also previously announced it will renew and expand its Performance Consultative Committee to advise on the ACCC’s merger review functions as well as the broad range of the ACCC’s responsibilities. The committee will consist of a range of stakeholders including consumer, business, and legal representatives.
The news comes during the recent push for transparency in the supermarket sector, with the ACCC pursuing legal action against Coles and Woolworths, and the government providing an extra $30 million funding for investigations and enforcement relating to the supermarket and retail sector over the next 3.5 years.
