The Australian government is set to introduce a new mandatory merger regime, effective January 1, 2026, marking a significant shift in the country's approach to merger control. This move aims to enhance transparency, consistency, and early oversight, aligning Australia with global standards set by the EU and US. Here's what you need to know about this upcoming change and its implications for businesses.
Regulatory Engagement: A Cultural Shift for Australian Dealmakers
International investors accustomed to the UK or EU regimes will find the new regulatory engagement process familiar. However, for domestic Australian dealmakers, this represents a substantial cultural shift. Competition analysis will now be an integral part of deal feasibility, valuation, and risk allocation from the very beginning. This means that businesses will need to factor in the potential regulatory hurdles early on in their deal-making processes.
Last Informal Review Opportunity
The ACCC has extended its informal review process until December 1, 2025, for very simple merger matters that do not raise significant competition concerns. This is a crucial opportunity for businesses to seek informal guidance from the ACCC before the new mandatory regime comes into effect. However, it's important to note that there is a risk that any assessment requested during this period may not be considered in time, and a filing under the new regime might be necessary.
Mandatory Notification and No Voluntary Clearance
From January 1, 2026, notification of mergers will be mandatory if the monetary thresholds are met. Parties involved in these transactions cannot proceed with the deal after this date without receiving ACCC clearance or an exemption. It's essential to include conditions precedent related to ACCC clearance conditions in the transaction agreements where applicable.
Consequences of Non-Compliance
The stakes are high. Completing a notifiable acquisition without ACCC approval is a serious breach of the Competition and Consumer Act 2010 (Cth) (CCA) and can result in enforcement action and large penalties of up to AU$50 million or AU$2.5 million for individuals. Additionally, the transaction will be automatically void, causing significant financial and operational setbacks.
Increased Time and Cost Implications
Transactions will now be subject to formal Phase 1 (30 business days) and, if required, Phase 2 (up to 90 business days) reviews. Businesses should plan for the time and associated costs required to prepare filings and for potential remedies and negotiations. Substantial new fees apply to each phase and are cumulative. Early engagement with the ACCC is recommended, especially for parties involved in concentrated markets or global transactions, to reduce the need for follow-up information requests and avoid delays in the determination period.
Information Burden for Corporate Development Teams
Corporate development teams, private equity sponsors, and legal advisors should integrate Australian competition screening into their standard M&A workflow. This involves substantial document collection and competition analysis pre-filing. Key steps include:
- (a) Mapping relevant product and geographic markets early in the process.
- (b) Collecting Australian revenue and customer data at the heads of agreement stage, including three-year Australian-based revenues, market share estimates, and lists of customers/competitors.
- (c) Assessing cumulative acquisitions in the last three years for threshold purposes.
By embracing these changes and adapting their processes accordingly, businesses can navigate the new mandatory merger regime effectively and avoid potential legal and financial pitfalls.
