Stronger Merger Reforms Announced by Australian Government

A merger is when two separate companies of similar size and value decide to operate (or merge) as a single entity. Mergers can provide huge benefits to the companies doing so, making them more efficient and innovative, which in turn benefits the Australian economy. Mergers can also impact the level of competition that remains in a market. Usually this is minimal but sometimes this impact can harm competition. The Competition and Consumer Act 2010 prohibits mergers which are likely to substantially lessen competition in any market.

On April 10th 2024 the Federal Government released a report titled “Merger Reform: A Faster, Stronger and Simpler System for a More Competitive Economy.” You can read the report here. Key points are noted below.

Why did the Government consider merger reforms?

The Government asked the Competition Review to assess whether Australia’s merger control system was fit for purpose. The Review consulted a diverse range of stakeholders and the feedback was clear: Australia’s current ad hoc merger process is unfit for a modern economy, lagging best practice in comparable countries. For business, some uncontentious mergers are subject to delays, uncertainty, and added costs with only limited guidance provided.

What is the objective of implementing these reforms?

By reforming Australia’s merger rules, the Albanese Government intends to promote competition, protect consumers and provide greater certainty by streamlining the approvals process. The changes will make our merger approval system faster, stronger, simpler, more targeted and more transparent. The reforms will simplify and speed up the process for mergers, consistent with the national interest, and give the ACCC stronger powers to identify and scrutinise transactions that pose a risk to competition, consumers and the economy. This will mean more clarity and certainty for businesses, and better safeguarding of consumers.

Key changes of the Government’s reformed merger system:

The reformed merger system will be stronger, simpler, targeted, faster and transparent. Read more on page 7 of the report here. Some of the proposed reforms include introducing a mandatory notification requirement for merger deals above certain thresholds, and a prohibition on merger transactions proceeding without receiving a determination from the ACCC or Tribunal.

When will the changes come into effect?

The new merger control system will apply from 1 January 2026, subject to the passage of legislation through the Australian Parliament. These are some of the biggest changes to Australia’s merger laws since the Trade Practices Act was introduced in 1974.

 

At Litton Legal we can assist with all aspects of mergers and acquisitions, offering our expert guidance and management every step of the way. Contact our friendly team here.