Greater transparency in the ACCC's merger review process

Articles Written by Dr. Wolfgang Hellmann (Special Counsel)

The ACCC has recently refined its merger review practice to increase the transparency of the informal review process. ACCC staff will now provide merger parties with detailed guidance, in writing, about the issues and concerns raised by their merger proposal. These changes will allow merger parties to respond more effectively to concerns raised by interested parties during the ACCC's public market enquiries. However, the ACCC will continue with its practice of not providing access to third party submissions.

Lack of transparency under the "old" process

The lack of transparency in the deliberation phase of the ACCC's informal merger review process has been criticised by businesses and their competition law advisers for quite some time. The criticism came in particular from businesses whose merger proposals had been opposed by the ACCC (e.g. the NAB/AXA proposal).

Prior to the recent changes, ACCC staff gave only limited guidance about concerns raised by market participants. Written guidance was generally not provided and where oral guidance was given, it usually was of a general nature. Further, ACCC staff was generally not prepared to provide any views as to whether or not subsequent information submitted, or undertakings proffered, by the parties would be likely to address the competition concerns to the ACCC's satisfaction.

Improvements under the "new" process

Under the new process, ACCC staff will provide the merger parties with more guidance in writing about the issues and concerns raised by their merger proposal - both in the phase prior to and after issuing a Statement of Issues.It can be expected that the quality and quantity of the information provided to the merger parties will vary depending on the director responsible for the review.

Any written communications to the merger parties will require sign off either by the Executive General Manager of the Mergers & Acquisitions Group (Tim Grimwade) or one of the General Managers (i.e. Suzie Copley, General Manager of the Coordination and Strategy Branch, or Rami Greiss, General Manager of  the Investigations Branch).

Merger parties will be afforded an opportunity to respond to the concerns identified by ACCC staff - in writing and/or in meetings with ACCC staff. In addition, throughout the entire merger review process, ACCC staff will engage in an open and candid ongoing dialogue with the merger parties to encourage a meaningful and timely engagement on the key issues raised by the merger proposal.

No advance notice of the Commission's decision

As was previously the case, there will be no advance noticeof the Commission's decisions, neither of the 'interim' decision whether or not to issue a Statement of Issues nor of the final decision to 'clear' or oppose a merger proposal. However, it can be expected that the dialogue with ACCC staff will provide the merger parties a good indication as to whether a Statement of Issues will be issued.

No access to third party submissions

Merger parties continue to have no access to third party submissions. The ACCC's concern is that granting access to such submissions, or revealing the identity of 'complainants', would deter third parties from making submissions to the ACCCC. However, ACCC staff's written communications to the merger parties will include the relevant concerns raised by third parties.

Increased use of information gathering powers

The ACCC's use of its mandatory investigative powers ("section 155 notices") in the context of merger reviews has increased in recent years. In the FY 2005/06, the ACCC issued section 155 notices in relation to two merger cases and in the FY 2009/10, the ACCC issued such notices in 8 cases (including notices requesting third parties to provide information or produce documents).

Section 155 notices are likely to be issued in merger cases, for example, where the information provided by the merger parties is insufficient or where the 'missing' information cannot be obtained from other sources.

While the ACCC will endeavour to use voluntary requests for information at first, there are instances where the ACCC will immediately resort to section 155 notices, for example, where the relevant documents are of a kind that companies are unlikely to hand over voluntarily (e.g. board papers).

Company representatives may be requested to appear before the ACCC and give oral evidence. This is most likely to occur where the information provided by the merger parties is inconsistent with information the ACCC has obtained from other sources or where the ACCC needs to test or clarify some of the information contained in board papers or other company documents.

Statistics - Merger review in the FY 2009/10

In the FY 2009/10, the ACCC reviewed 328 merger cases. Out of these 328 cases:

  • 151 mergers were cleared in the "pre-assessment" phase without conducting public market enquiries and generally within 2 weeks;
  • 158 mergers were cleared after public market enquiries and 55% of these mergers were cleared within less than 4 weeks and 80% within less than 6 weeks;
  • 4 mergers were cleared subject to providing court enforceable section 87B undertakings; and
  • 15 mergers were opposed - this includes public and confidential opposition decisions.
Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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