Overview
Starting 1 July 2025, Australia will begin transitioning to a new merger control regime, marking a significant change in how mergers and acquisitions are regulated. The new mandatory system requires notification to and approval by the Australian Competition and Consumer Commission (ACCC) for proposed mergers and acquisitions that meet certain monetary thresholds. This replaces the previous informal review process. The change aims to enhance transparency, efficiency, and competition in the market.
An acquisition that meets the thresholds will be notifiable to the ACCC if the target is ‘connected with Australia’, which means the target carries on, or intends to carry on, business in Australia.
Thresholds
Companies will need to notify the ACCC of acquisitions that are “connected with Australia” (which means the target carries on, or intends to carry on, business in Australia) where the following tests are met:
Economy-wide monetary threshold
Combined Australian turnover of acquirer group and target group over $200m and either:
- the Australian turnover of target group is over $50m; or
- the global transaction value is over $250m.
Large acquirer threshold
- the Australian turnover of the acquirer group is over $500m; and
- the Australian turnover of the target group is over $10m.
Three year cumulative thresholds
Either:
- The Combined Australian turnover of acquirer group and target group is over $200m and the value of all businesses that have been acquired over the past three years by the acquirer group that provide the same goods or services as the target group (including the target if the transaction completes) is over $50m; or
- The acquirer group’s turnover is over $500m and the value of all businesses that have been acquired over the past three years by the acquirer group that provide the same goods or services as the target group (including the target if the transaction completes) is over $10m.
Note this excludes acquisitions where the turnover is less than $2m.
Phase in of new regime
The new regime introduces a two-phase implementation:
Voluntary notification from 1 July 2025 to 31 December 2025
- During this transitional phase, businesses can voluntarily notify the ACCC of proposed mergers and acquisitions that meet certain thresholds.
- This period allows companies to familiarise themselves with the new processes before mandatory requirements take effect.
Mandatory notification from 1 January 2026
From 1 January 2026, proposed acquisitions that meet certain thresholds must notify the ACCC and obtain approval before proceeding with the transaction.
Key features of the new regime
- Mandatory and suspensory system: Businesses must notify the ACCC of acquisitions meeting the prescribed thresholds and must obtain approval before completing the transaction.
- ACCC as primary decision maker: The ACCC will assess whether a proposed acquisition is likely to substantially lessen competition, considering factors such as market concentration and the cumulative effect of multiple acquisitions over the past three years.
- Transparency and efficiency: The new regime aims to provide faster decisions, particularly for non-contentious mergers and greater transparency in the assessment process.
- Transition provisions: Transactions cleared by the ACCC under the transitional period between 1 July and 31 December 2025, and completed within 12 months, will not require notification under the new regime.
Questions?
These changes in the merger reform regime present a significant shift in the way that companies must approach and undertake Australian mergers and acquisitions. If you have any queries, need any assistance or would like to discuss a potential upcoming transaction, we’d love to help.
