The new merger regime could turn into a complete shemozzle … but now is the time to waiver

The new merger regime will commence on 1 January 2026.

It will represent the most significant change to competition law and the regulation of mergers and acquisitions in Australia in over 50 years. 

The new merger regime will require parties to a transaction that meet certain revenue or deal value thresholds to notify their transaction to the competition regulator, the Australian Competition and Consumer Commission (ACCC) and obtain ACCC approval before completion.

Doing otherwise will constitute a breach of the law punishable by substantial fines. The law will also regard the transaction as void or voidable (depending on which Treasury etching becomes concrete in the coming weeks).

However, the low monetary thresholds (by global standards) for notification and broad legal definitions of concepts such as “acquisition of assets” and “connected entities” will result in a new regime that catches an embarrassment of deals – none of which would have ever seen the regulatory light of the day before now. 

The first two applications under the new regime are telling – agreements for lease (which are arguably pro-competitive). Licences, leases, IP transactions and a host of other commercial conduct will also now be caught. The latest Treasury proposals go even further, requiring increases in shareholdings that do not result in control to be notified to the ACCC. All of the above transactions will be paraded on the ACCC website for others to gawk, comment, copy and potentially game by way of challenge. 

Competition lawyers should be happy – their clients not so.

The fundamental concern with the new regime (and why it could become a shemozzle) is that the vast majority of these transactions will not raise competition concerns. The evidence clearly supports this:

• Of the 300-400 deals notified to the ACCC every year under the current regime, 80% are cleared without the ACCC undertaking any market enquiries – that is, the ACCC quickly accepts that these deals do not raise any competition concerns “on the papers” alone.
• Of those 300-400 deals notified to the ACCC every year under the current regime, only a handful are blocked or withdrawn on the basis they raise serious competition concerns. The rest are cleared, some with remedies, some without.
• The last two months has seen a tsunami of deals notified to the ACCC for clearance under the current “friendly” regime to avoid the gauntlet of the coming changes. None raise competition concerns yet all would need approval from the competition regulator in the new world.

So why are we notifying a competition regulator about deals that don’t raise competition concerns? 

The reason is this – the new regime is no longer just about competition. It is about transparency and disclosure – who is buying what and why? 

The imminent commencement of the new merger regime sits uncomfortably next to the Productivity Commission’s finding at the recent Economic Reform Roundtable that “regulatory hairballs” have found their way into “almost every corner of our economy”. In this context, the new merger regime may cause some indigestion in the form of investment and deal making blockages. Corporate M&A arrows are starting to quiver towards Asian and New Zealand targets.

But there is a fix – the waiver process. 

With just over 50 days before the new merger regime begins, there is little to no detail on the circumstances in which a waiver may be granted. The ACCC has helpfully suggested that waivers may be granted where a transaction does not raise competition concerns but at the same time, it is anticipated that waivers will not be used routinely. The crystal ball gazers have predicted that 100 waivers will be lodged in the first year of the new regime’s operation. 

The current tsunami suggests thousands will wash ashore. But this should be encouraged and embraced. Indeed, the waiver process should be the central focus of the regime given that 90% of transactions will not raise competition concerns. It will effectively be the new “pre-assessment” tool. 

Clear and comprehensive guidance on the circumstances in which waivers will be granted is urgently required. This will provide the business community with the certainty it desperately requires before the new merger regime kicks off.

Indeed, in announcing the new merger regime, it was widely acknowledged that “most mergers are unlikely to raise competition concerns”. It was touted that the new regime would “provide greater certainty by streamlining the approvals process [and] make our merger approval system faster, stronger, simpler, more targeted and more transparent. The reforms will simplify and speed up the process for mergers … [which] will mean more clarity and certainty for businesses.”

All of this is true, as long as we can waiver.