Merger reform: Will you need to notify your deal under the new regime? Will it get blocked?

The Australian Government last week introduced the long-anticipated Bill overhauling the Australian merger review regime to bring it into line with most international jurisdictions.

The proposed changes come into force on 1 January 2026.

Overview of what is proposed

As foreshadowed in our earlier article, the reforms create a new merger regime which is:

a. mandatory – merger parties must notify the ACCC before completing any acquisition that meets specific monetary thresholds;
b. suspensory – implementation of notifiable mergers is prohibited until the ACCC grants approval;
c. backward looking – requires parties to divulge (and the ACCC to take into account) all mergers in the three years prior to the reviewable deal;
d. transformative for big companies doing small deals – the concept of substantial lessening of competition (SLC) will address entrenchment and consolidation of market power; and
e. costly – i.e. notification fees are expected to be between $50,000 - $100,000 for most notified mergers, with an exemption for mergers notified by small businesses.

Which deals will be caught?

The Treasurer has stated that the mandatory merger notification thresholds will be triggered where:

• For any merger, the Australian turnover of the combined businesses is above $200 million, and either the business or assets being acquired has Australian turnover of more than $50 million or global transaction value above $250 million.
• For a very large business, the Australian turnover of more than $500 million buying a smaller business or assets with Australian turnover above $10 million.
• For any merger for businesses with combined Australian turnover of more than $200 million, where the cumulative Australian turnover from acquisitions in the same or substitutable goods or services over a three-year period is at least $50 million, will be captured; or $10 million if a very large business is involved.

The Treasurer has also stated that supermarkets (including liquor retailing in likely instances of crossover) will be the first industry where any deal must be notified to the ACCC for clearance before completion. This reflects the ACCC’s focus on addressing cost of living pressures and preventing consumer harms in essential goods markets.

While the Minister will have the power to adjust the above monetary thresholds in response to market changes and designate other industries similar to supermarkets, the above is likely to be confirmed in the coming month.

In addition, the Bill allows the Government to pass market concentration thresholds in the future if required.

Deals that result in control will be reviewed

Notification will be required for acquisitions that result in ‘control’ (i.e. the practical influence over the entity’s financial and operational decision making) – it will not be necessary where an acquirer already had control before the acquisition. However, the Minister can designate certain classes of acquisitions that must be notified, even if control isn’t involved.

Notification will also be required for acquisitions of shares that increase an acquirer’s voting power above 20 per cent in Australian-listed companies or managed investment schemes, and unlisted Australian companies with more than 50 members – even where the acquirer’s voting power was already above 20 per cent.

Process and timing

The Bill provides detail on the review process, which will unfold in two phases:

• Phase 1: A preliminary review to quickly clear acquisitions that raise no competition concerns. The ACCC will have 30 business days to make a decision, though this period can be extended.
• Phase 2: For more complex mergers that may substantially lessen competition, the ACCC will provide written notice to the parties, outlining its competition concerns. The Phase 2 review will take up to 90 business days, though this period may be extended depending on the complexity of the case, including in circumstances where the ACCC has become aware of a material change of fact.

Once the ACCC has approved the deal, parties will have 12 months to complete – otherwise the determination becomes ‘stale’ (i.e. it expires).

Penalties for completing without clearance or providing false information

The reforms introduce penalties for non-compliance with the regime (i.e. completing without approval if your deal meets the thresholds) and for providing false or misleading information.

Most importantly:

• Acquisitions that are required to be notified but complete without ACCC approval, or acquisitions made after the ACCC has prohibited them, will be considered void and will attract strict liability penalties of approximately AUD $333,000 for companies and $66,000 for individuals (per contravention).
• If merger parties fail to disclose material facts or provide inaccurate information during the notification process or any subsequent stages of the ACCC’s review, they face substantial penalties, including:
  - civil penalties of up to $50 million for corporations; and
  - $2.5 million for individuals involved in providing misleading information; and
  - divestiture orders.

Limited ability to provide new information to the Tribunal for review

If parties seek review of the ACCC’s final decision, the Australian Competition Tribunal will conduct a limited merits review. This review is generally limited to the material that was originally provided to the ACCC but the Bill introduces scope for the parties to produce new material, as long as it is new information that was not in existence at the time the ACCC made its determination. 

What does it all mean for your deal?

• ACCC clearance for M&A will take more time and incur more cost: The reform introduces a mandatory notification system that requires more information and documentation upfront, making the process costlier and lengthening the transaction timeline. Despite the Government’s and ACCC’s claims that the process will be quicker, businesses should be prepared for extended timetables and higher expenses once they start considering a deal.
• Mandatory nature and time and cost unlikely to chill deals: Despite the additional time and cost ACCC clearance will require, we expect that the mandatory nature of the regime and the associated costs are unlikely to deter deal-making. Many transactions will not meet the notification thresholds and larger deals that do will likely absorb the additional expenses as part of the business.
• Acquisitions by large players will be more difficult: The most significant challenge arising from the reforms will be for large market players, especially in industries like supermarkets, where the new SLC test will make it more difficult to secure approval. These businesses may need to focus on adjacent sectors to pursue growth.
• New control test unlikely to reduce ACCC scrutiny: the ACCC already closely scrutinises minority acquisitions and control issues under the existing regime. As such, we don’t expect material changes in how these transactions will be reviewed going forward.
• Retrospective review: The ACCC’s ability to review a business’s acquisition history over the past three years when evaluating a new proposal is particularly concerning for private equity firms. This retrospective scrutiny could disrupt acquisition pipelines, with the potential for past transactions to influence new proposals, even when earlier deals were not subject to notification under previous thresholds.