A new merger control regime is going to be implemented from 1 January 2026 in Australia where the Australian Competition & Consumer Commission (ACCC) will operate a framework for company mergers and acquisitions to prevent anti-competitive outcomes.
The regime will require mandatory notification for large deals, a review process by the ACCC and potential blocking of the deal or having conditions incorporated to protect consumers and market fairness.
It will also include ‘creeping or serial acquisitions’ provisions where a business buys up similar businesses which collectively build up and allows that business to gain significant market power.
An acquisition must be notified to the ACCC if it:
- comes into effect on or after 1 January 2026;
- is ‘connected with Australia’;
- satisfies certain monetary and control thresholds; and
- does not benefit from an exemption
What are the monetary thresholds?
The monetary thresholds will apply to two specific groups which are defined as:
Large or large corporate groups where the Australian revenue of the acquirer and target is at least $200 Million and any of the below apply:
- the target has Australian revenue of at least $50 million; or
- the global transaction value is at least $250 million; or
- the cumulative Australian revenue from the target and any similar acquisitions in the last three years is at least $50 million
Very large corporate groups where the acquirer has Australian revenue of at least $500 million and either of the below apply:
- the target has revenue of at least $10 million; or
- the cumulative Australian revenue from the target and any similar acquisitions in the last three years is at least $10 million
Australian revenue is defined as the gross revenue for the most recent 12-month financial reporting period, from transactions/assets within or into Australia.
How is the revenue of the acquirer calculated?
The revenue of the acquirer’s ‘connected entities’ must be included, and two entities are connected if.
- they satisfy the definition of ‘related bodies corporate’ under s4A of the Competition and Consumer Act 2010 (Cth);
- they satisfy the definition of ‘control’ under s50AA of the Corporations Act 2001 (Cth); or
- they are both controlled by a common entity.
How is the revenue of the target calculated?
This will depend on whether it is an acquisition of shares or assets.
In relation to the purchase of shares in a body corporate the revenue will include Australian revenue of any of the target’s ‘connected entities’ that are being directly or indirectly acquired.
In relation to assets, it will include:
- the Australian revenue of the asset’s owner that is attributable to the asset; or
- where such an attribution is not reasonably practicable, 20% of the market value of the asset.
Creeping or serial acquisitions
The monetary thresholds will apply to two specific groups which are defined as:
Medium to large, merged entities where:
- the combined Australian revenue of the merger parties is at least $200 million; and
- the cumulative Australian revenue from acquisitions in the past 3 years that predominantly involves the same or substitutable goods or services is at least $50 million
Very large acquirers where:
- the acquirer group’s Australian revenue is at least $500 million; or
- the cumulative Australian revenue from acquisitions in the past 3 years that predominantly involves the same or substitutable goods or services is at least $10 million
The following acquisitions are excluded from being accumulated:
- acquisitions notified to the ACCC, except those notified under the creeping or serial acquisitions threshold;
- acquisitions below $2 million Australian revenue;
- acquisitions not connected with Australia.
It is important to note that even when at least one of the notification thresholds above is met it only has to be notified if:
- the target is connected with Australia, that is, they are ‘carrying on business in Australia’
- no exemptions apply.
Are there any exemptions from notification?
There are a range of exemptions which include:
- acquisitions by a person as an administrator, receiver, receiver and manager or liquidator;
- acquisitions of debt instruments, debt interests, asset securitisation arrangements, securities financing transactions, security interests;
- acquisitions that occur by operation of Australian law;
- business transactions, other than land and patents;
- land acquisitions for the purposes of developing residential premises, commercial property acquisitions by businesses engaged in buying, selling, leasing or developing land;
- lease extensions or renewals of land;
- routine acquisitions in clearing and settlement activities;
- routine trading and fundraising / capital-raising activities.
What is the process to apply for a review notification?
After notification to the ACC:
- initial assessment (phase 1) takes up to 30 business days and as little as 15 business days for “fast track” cases
- for complex cases (phase 2) add another 90 days
- if a public benefit application is required after a phase 2 rejection an additional further 50 days
- After an approval by the ACCC there is a mandatory 14 wait for any appeal
The cost of a phase 1 notification is $56,800 and phase 2 reviews add substantial costs of between $475,000 to $1.595 million depending on the size of the deal.
A public benefit application is $401,000.00.
The cost of a waiver for a straightforward matter is $8,300.00.
Penalties for non-compliance
Penalties for not complying with the new regime are significant.
For corporations it is the greater of:
- $50 million;
- three times the value of the benefit obtained from the breach;
- 30% of the corporation’s adjusted annual turnover during the breach period (if benefit isn’t calculable).
For individuals it is up to $2.5 million.
Further the ACCC has the power to seek to unwind the non-approved transaction.
How can FC Lawyers help?
Our business and corporate team can assist with the notification process and advise on the requirements and next steps.
Contact our team today to discuss your legal needs.
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