by Ben Westcott and Harry Brumpton
Australia is overhauling its mergers and acquisition rules, ending a voluntary reporting code for big takeovers that has forced the country’s competition watchdog to take some deals to court.
Under the changes, the competition regulator will have to be notified of all proposed deals above monetary and market share thresholds, ensuring takeovers most likely to impact consumers are subject to sufficient scrutiny, Treasurer Jim Chalmers said in a statement Wednesday. The regulator will also be able to take into account previous acquisitions when determining whether a deal would lessen competition.
The new laws remove the path to appeal blocked deals in court and brings Australia in line with other major economies where companies submit to a mandatory competition review upfront.
“This is a fundamental shift in our merger regime,” said Caroline Coops, a competition law partner at King & Wood Mallesons. “The upshot is that transactions that meet the thresholds have to be notified to the ACCC and can’t proceed without their approval.”
The last major deal the Australian Competition and Consumer Commission tried to block was ANZ Group Holdings Ltd.’s A$4.9 billion ($3.2 billion) acquisition of smaller rival Suncorp Group Ltd.’s banking arm, saying it would reduce competition in the home-lending market. However, that decision was eventually overturned in court after ANZ appealed.
“Most mergers have genuine economic benefits — allowing businesses to achieve greater economies of scale and scope, helping them to access new resources, technology and expertise,” Chalmers said in the statement. “However, they can cause serious economic harm when firms are solely focused on squeezing out competitors to capture a larger percentage of the market.”
Long push
ACCC Chair Gina Cass-Gottlieb has been pushing for an updated M&A rulebook, saying that consumers and businesses will pay higher prices and have less choice if anti-competitive mergers are able to continue to proceed. She welcomed the reforms that are expected to start in January 2026.
As well as major deals, the rules are aimed at guarding against so-called “creeping acquisitions” where firms can consolidate an industry through a series of smaller purchases over time.
“Higher prices, less choice and less innovation can result from weakened competition,” Cass-Gottlieb said in a statement. “Stronger merger laws are critical to ensure anti-competitive mergers do not proceed.”
In an effort to streamline some deals, takeovers that raise no competition concerns will be approved within 30 working days, Chalmers said.
Rod Sims, who led the ACCC for 10 years until 2022 and has long been pushing for reform, was strongly supportive of the upcoming changes, saying they would bring Australia’s merger regime “up to scratch.”
Sims said the vast majority of mergers would still go through “very quickly” under the reforms, while a small number of complex or controversial proposals would receive more scrutiny.
“We’re talking two or three or four mergers a year that we might see a different outcome,” he said.
‘No substantive change’
For Sandy Mak, partner at Corrs Chambers Westgarth and a veteran M&A lawyer, the changes might have less of an impact than others expect.
“This shouldn’t impact deal flow substantially,” she said. “The test itself the ACCC is applying in determining whether or not to approve a merger is substantially the same as it was before. There is no substantive change to the law, this is a process change.”
Kirsten Webb, a competition partner at law firm Clayton Utz, had mixed views on the reforms, saying it’s important that applicants won’t be required to show the merger will not substantially lessen competition.
“This should keep Australian merger control laws broadly consistent with our major trading partners, which also don’t reverse the onus of proof,” she said.
“But it’s disappointing that review of ACCC decisions will be a limited merits review with no recourse to the Federal Court.”
Copyright Bloomberg News
