Australia’s merger and acquisition landscape receives largest regime shake up in 50 years

The new regime will be rolled out from 1 January 2025 on a voluntary basis, and mandatory notification for parties that meet notification thresholds will come into effect from 1 January 2026. 

Key changes 

The legislation will introduce key changes including: 

• Mandatory notification: The legislation introduces a mandatory notification requirement for parties with deals above certain thresholds of value, turnover or market shares. 
• Suspensory rule: Parties will be prohibited from proceeding with a notifiable merger until they have received clearance from the Australian Competition and Consumer Commission (ACCC) approving the deal. 
• Increased penalties: Penalties will be introduced for non-compliance with mandatory notifiable mergers.
• Filing fees: Notifiable mergers will attract a filing fee (yet to be confirmed), with some exceptions for small businesses. While the fee amount has not yet been confirmed, the bill’s Explanatory Memorandum indicated they may be in the range of $50,000 – $100,000.
• Increased transparency: The ACCC will publish a public register of all notifiable mergers and acquisitions, aside from acquisitions such as hostile takeovers which will be given a temporary period of 17 days before being listed publicly. 
• Clarity around timeframes: ACCC will have pre-determined timeframes for reviews, including 15-day fast track, 30-day Phase I, and 90-day Phase II review. 
• High risk designation: The legislation will empower the Treasurer to designate certain mergers as 'high risk,' thereby enabling the ACCC to review any merger falling under this designation.
• Industries of interest: industries of particular interest to the ACCC have been identified for scrutiny, including supermarkets, liquor stores, pathology and private cancer radiation clinics. 

Notifiable mergers 

The Government has indicated that under the new law, mergers that meet the below thresholds are required to notify the ACCC: 

• Mergers with an Australian combined turnover above $200m, and either a global transaction value of $250m or where at least two of the businesses have Australian turnover above $50m.
• Businesses with Australian turnover more than $500m acquiring assets or at least two of the businesses have Australian turnover above $10m. 
• Cumulative thresholds: 
  • Mergers with a combined turnover of $200m, and the cumulative turnover of assets acquired over the three years prior is $50m.
  • Mergers with a combined turnover of $500m, and cumulative turnover of assets acquired over the three years prior is $10m. 

What does this mean for businesses?

The incoming changes provide much needed transparency and encourage competition; however, they will have some consequential ramifications for sellers, acquirers and investors. Although the ACCC will now have clear timeframes in which they will endeavour to review deals, the introduction of mandatory notification and the suspensory rule may increase transaction times and costs, adding complexity in an already long process. 

From a seller’s perspective, the changes will need to be considered fully at the outset of a transaction process ensuring there is a focus on potential acquirers that have a strong track record with the ACCC and do not represent significant completion risk.

From an acquirer / investor’s perspective, the changes have the potential to alter the strategy for acquisitions. Those that get on the front foot and can display a strong relationship and ability to transact will position themselves at the top of the list for competitive processes. 

Prepare now 

Although the changes to Australia’s merger and acquisition laws will be voluntary from 1 January 2025 and mandatory notifications required from 1 January 2026, businesses will still benefit from preparing early if they have acquisition plans in the coming year. Things to take into account when considering a merger or acquisition now include: 

• For acquirer / investors: 
  • Be strategic and selective. When considering acquisitions, paying close attention to turnover, subsidiaries and geographical locations of parent companies. 
  • Be prepared. Come to the deal table with your ACCC strategy. 
  • Get the right advice. Competition law is a complex area, so engage appropriate legal advice early.
• For sellers:
  • Time your exit. To get the best value for your business, you want to ensure that logical acquirer / investors are in the best possible position to transact, which now includes considering their recent dealings with ACCC. 
  • Get the right advice. At the early stages of planning for a potential transaction seek appropriate legal advice.
  • Present your business in the best possible light. Ensure your transaction is the top priority for logical acquirer / investors. 
  • Engage early. Start conversations on your exit early to ensure that you are fully aware what drives value and how you can plan for a smooth transaction.

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