Australian Parliament Passes Mergers and Acquisitions Reform Bill 2024

The Bill is expected to modernise Australia’s merger and acquisition framework by introducing a more robust process with the aims of greater transparency and ultimately to ensure transactions are not leading to anti-competitive behaviour. The Bill focuses on potential acquisitions over clear thresholds that have the potential to substantially lessen competition and consumer choice in the economy. An actual or perceived reduction in competition may arise as a result of acquisitions that create, strengthen or entrench substantial market power post completion.

The Bill introduces mandatory notification requirements for proposed transaction over certain thresholds or in certain industries. This notification will in turn require an economic and legal assessment be completed pre-completion and within prescribed timelines, before approval is granted to proceed with the transaction. Failure to notify and abide by this process will result in the proposed transaction being legally void and the potential for financial penalties. We expect that this Bill will draw out proposed transactions, particularly where seeking regulatory approval to proceed. Both acquirers and vendors need to be aware for this when structuring a transaction.

Notification requirements

The Bill introduces a framework that will require parties to notify the Australian Competition and Consumer Commission (“ACCC”) for all mergers and acquisitions where there is a proposed change of control event of a target that has a material connection to Australia. A change in control refers to the acquirer gaining control or practical influence over the outcome of decisions about its financial and operating policies. The changes bring a closer alignment to existing definitions of control as per the Corporations Act.

Notificationrequired where monetary thresholds are exceeded

A proposed transaction needs to be notified where the transaction exceeds the following thresholds:

• Large merger: a business with a turnover > $200m acquiring a business or assets with turnover > $50m or global transaction value above $250m.

• Large acquirer: a business with a turnover > $500m acquiring a smaller business or assets with turnover > $10m.

• Serial acquisitions: a business with a turnover > $200m where the cumulative Australian turnover from acquisitions in the same or similar goods or services over a 3-year period is at least $50m, or $10m for a very large business.

There is an ability to seek a waiver from the application of the legislation, although this has yet to be tested in practice and a formal process has not yet been developed.

Notification may also be required for Specific industries

The Bill also introduces the power to determine specific industries or class of acquisitions as requiring notification, regardless of whether the other notification requirements are met. Currently the indications as to whom may be captured include:

• Supermarkets

• Interests of 20% or more in private or unlisted companies if one of the parties has turnover of more than $20m.

• Top four sub-industries with serial acquisitions, including childcare, aged care, medical GPs, and dentists.

• Other sectors of interest such as fuel, liquor, and oncology radiology mergers.

Pre-Lodgement Discussions & Review timelines

The ACCC is advising parties to engage in preliminary discussions prior to undertaking a formal notification. The aim of this is to expedite the subsequent review period and phases. Upon being notified of a proposed transaction, the ACCC will then complete their review of the proposed transaction and provide approval or seek further information.

The following are indicative phases of review periods after pre-lodgement discussions have been completed:

• Phase 1: up to 30 business days after the acquisition has been notified. A 'fast-track' determination may be made after 15 business days if no issues are noted.

• Phase 2: if a determination is not made during Phase 1 and the ACCC is satisfied the notified acquisition could have the effect or likely effect of substantially lessening competition, it has up to an additional 90 business days to complete its review.

• Consideration of Substation Public Benefits: This is a subsequent process if Phase 1 and Phase 2 are not passed, whereby the ACC will consider the public benefit of the proposed transaction. An application must be lodged with 21 days of Phase 2 and should be resolved with 35 subsequent business days.

• Tribunal Review: In the event that further appeal or review is required, an application should be lodged with 14 calendar days after the finding.

In addition to the above, the Bill also allows the ACCC to extend these periods if certain criteria are met.

Our takeaway is to consider early pre-lodgement discussions as required to seek to limit the review to Phase 1 only where possible. Landing in Phase 2 or subsequent could lead to a significant delay in any proposed transaction seeking regulatory approval.

Additionally, it is worth understanding that the notification and pre-approval for transactions is likely to require a new fee of between $50,000 to $100,000 per transaction, which should be considered when budgeting for transaction costs and the deal.

What should you be thinking about

If you are planning for a transaction to occur in the coming months (either on the buy side or sell side) and there is potential to fall into the above, then we recommend reaching out to discuss next steps.

Informal clearance under the current framework carries the risk of having to restart the process under the new framework or post completion review by the ACCC, with the potential of the transaction deemed void. However, proposed transaction that are granted informal clearance prior to 1 January 2026 will be entitled to statutory protection, provided the transaction is completed within 12 months.

How can we help?

Reach out to our Transaction Advisory Services team today to learn how we can help you navigate the change.