Consultation begins on merger reforms
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The news: The federal government has released a consultation paper on proposed notification thresholds as part of reforms to Australia’s merger rules, with the aim of boosting competition and productivity in the economy.
The numbers: Under the new proposals, mergers will trigger mandatory notification requirements if they reach either of the two following monetary thresholds and if there is a material connection to Australia:
- If the combined Australian turnover of the merger parties (including the acquirer group) is at least $200 million, and either the Australian turnover is at least $40 million for each of at least two of the merger parties or if the global transaction value is at least $200 million.
- If the acquirer group’s Australian turnover is at least $500 million, and either the Australian turnover is at least $10 million for each of at least two of the merger parties or if the global transaction value is at least $50 million.
It is also proposed that mergers will trigger mandatory notification requirements if they reach either of the two following market concentration thresholds:
- A share of 25% of an affected market, where Australian turnover of at least two of the parties to the acquisition (including the acquirer group) is at least $20 million.
- A share of 50% of an affected market, with a lower turnover requirement of $10 million.
The context: The government said the proposed reforms, which were released in draft last month, will make Australia’s merger approval system "faster, stronger, simpler, more targeted and more transparent".
They reforms are designed to ensure theAustralian Competition and Consumer Commission (ACCC) is informed of mergers most likely to be anti-competitive, while minimising the overall compliance burden on businesses.
The government said the reforms will make it easier for the majority of mergers to be approved quickly, so the ACCC can focus on the minority that give rise to competition concerns. The changes aim to enable the ACCC to better identify growing market power and protect Australian consumers from anti-competitive mergers.
Mergers which meet the thresholds will be subject to the new merger rules from 1 January 2026, following passage of legislation. There will be periodic reviews of the new merger system, including a statutory review which will take place three years from the start of the new system.
Submissions on the proposed merger notification thresholds are open until 20 September 2024.
The source: Treasury media release
