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Reform to Australia’s merger clearance regime

By Ron Smooker, Shaun Temby, Jacqueline Picone, and Oliver Wahlstrom

• 18 April 2024 • 3 min read
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A new mandatory, suspensory merger review system conducted by the ACCC will come into effect in Australia on 1 January 2026.

Reform to Australia’s merger clearance regime

Key takeaways

  • A new mandatory, suspensory merger review system conducted by the ACCC will come into effect in Australia on 1 January 2026.
  • After this date, the expense and administrative burden associated with obtaining merger clearance in Australia will increase, as will the potential delay, and these matters will need to be factored in to transaction timelines. The process for merger clearance will also become more structured and inflexible compared to the current informal approach.
  • Mergers in industries with significant concentrations of market share will be subject to much greater scrutiny, and there will be increased potential that the ACCC will block such mergers.
  • Given the proposed reforms around “creeping acquisitions”, businesses should now begin to consider the effect of any potential acquisition on its market share as, from 2026, the ACCC may consider in its merger assessments the total effect of all mergers within the previous three years.


The Commonwealth Treasurer, Dr Jim Chalmers, has unveiled proposed reforms to Australia’s merger and acquisition clearance rules.

The announcement of the reforms by the Commonwealth Government is in response to calls from the Australian Competition and Consumer Commission (ACCC) for greater competition, better protection of consumers and the streamlining of the approval process. The announcement also comes amid, and certainly reflects, significant changes in the Australian economy, with the rapid transition to net zero and the growth of the digital economy, and a political appetite to lower prices for consumers given 'cost-of-living concerns'.

The reforms will replace the current voluntary notification and merger authorisation regime with a single mandatory and suspensory administrative system, with the ACCC as the first instance decision-maker. This addresses perceived issues with the current voluntary system that has, it is said, allowed the competition impact of a number of significant transactions to avoid proper scrutiny from the regulator.

The Commonwealth Government will develop the reforms in consultation with stakeholders over the next 12 months. The new system will apply from 1 January 2026. We will keep you updated as the legislation takes shape.

Key features of the new system

  • Mandatory notification

    Notification to the ACCC of transactions above certain thresholds will no longer be voluntary but mandatory, and these transactions will not be able to proceed without ACCC approval. The thresholds will be monetary and market share based.

    Monetary thresholds will be set with reference to typical metrics such as revenue, profitability and transaction value. Any transaction below the monetary threshold that presents a competition risk will still need to be notified to the ACCC if it meets the market share threshold. The Government will set the thresholds following further consultation.

    Additionally, and to prevent ‘creeping acquisitions’, all mergers entered into by the acquirer or the target within the prior three years (whether they were notifiable or not) will be aggregated for the purposes of evaluating whether the merger meets the notification thresholds.

  • Single administrative process

    The ACCC will be the first instance administrative decision-maker for all mergers. Merger parties will no longer have a right to seek merger approval by the Federal Court of Australia in the first instance.

    Parties may apply to the Australian Competition Tribunal (Tribunal) for merits review of ACCC determinations, which will be limited to material that was before the ACCC but allow new evidence to be submitted. Judicial review of the Tribunal’s decision may be sought by the parties in the Federal Court (to determine whether the Tribunal's decision was made in accordance with law).

  • Substantive test

    Under the proposed reforms, a merger will be prohibited if the ACCC reasonably believes that it would have the effect, or be likely to have the effect, of substantially lessening competition in a market, including if the merger ‘creates, strengthens or entrenches a position of substantial market power’. This significantly expands the current substantive test set out in section 50 of the Competition and Consumer Act 2010 (Cth).

    If the ACCC determines that the transaction shall not proceed for competition reasons following a Phase II review (see below for further detail), the parties to the transaction may seek approval for the merger from the ACCC on the grounds that the merger would result, or be likely to result, in a substantial benefit to the public.

  • Suspension of completion

    Completion of any notifiable transaction will be suspended until clearance has been granted by the ACCC, or in the case of a review of an ACCC determination, by the Tribunal.

  • Clear timeline

    The proposal outlines indicative timelines for the ACCC review, being:

    • Phase I – initial review of 30 working days where it does not find any competition concerns. A fast track option with a determination made in 15 days is available for non-contentious applications; and
    • Phase II – in depth review of a further 90 working days where the merger is likely to raise competition concerns, with a determination at working day 120.

    If merger parties seek the ACCC’s approval on the grounds of substantial public benefit following a Phase II review (see ‘Substantive test’ section above), the ACCC must make a determination within 50 working days.

    Where an ACCC determination has been appealed, the Tribunal must make its decision within 90 calendar days, but this period may be extended by a further 90 calendar days where necessary.

  • Fees

    Notification will incur filing fees in the range of $50,000-$100,000 per application. A fee exemption will be available for small businesses.

  • Transparency

    All mergers notified to the ACCC will be listed on a publicly maintained register and will include the names of the merger parties, a short summary of the transaction and the review timeline.

  • Penalties

    Merger parties, including executives and officers responsible for the merger, will face substantial penalties for failing to notify the ACCC of a notifiable transaction or for proceeding to the completion of the merger before receiving the ACCC’s determination.

Next steps

The specifics of the new merger clearance system will be determined following Treasury’s further consultation with stakeholders over the course of 2024-2025 regarding appropriate merger notification thresholds, merger review timelines, penalties and any principles to supplement the substantive test (outlined above).

In summary

The announced reforms are substantial and provide the ACCC with increased merger clearance powers.

Dealmakers who might have otherwise taken a bullish position on entering transactions in Australia must now be conscious of the parameters that the new approval process presents and that contentious mergers will in all instances be reviewed by a regulator with clearly expressed views about the current state of the Australian market.

By Ron Smooker, Shaun Temby, Jacqueline Picone, and Oliver Wahlstrom

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