Mergers reform to increase deal scrutiny

The nation’s consumer watchdog has welcomed a proposed reform of the nation’s merger laws, to be announced by Treasurer Jim Chalmers today.

The Treasurer today announced plans to change the nation’s merger laws from 2026.

The proposed legislative change would require mergers of a certain size to be cleared by the Australian Competition and Consumer Commission in a bid to stamp out anti-competitive deals.

The current system of referral is voluntary, and an average of 330 mergers are assessed each year. In 2023, more than 1,400 deals were recorded for a combined value of $300 billion.

“We don't know whether these are the right 330, or the mergers with the greatest potential to cause harm," Dr Chalmers said in his speech announcing the changes today. 

Under the plan, mergers will be assessed for their impact on competition and public benefit before an ACCC determination is made on whether they can go ahead.

Assessments could take as much as 180 days, though the majority would fall to between 15 and 30 days for deals of no concern to the watchdog.

The proposed frameworks leave room for the ACCC to approve anti-competitive mergers if it is satisfied that there is a substantial benefit to the public.

Companies would also have scope to contest ACCC findings at a Federal Court tribunal under the proposed system.

The dollar value that would result in a merger’s referral is yet to be decided, with consultation to be carried out this year. Market share will also be factored into referral assessments.

Notifications by merging parties to the ACCC are expected to cost between $50,000-$100,000.

Legal changes will also include measures to handle serial acquisitions, where businesses make several smaller transactions over time which add up to harm competition.

“We welcome the Treasurer’s announcement today that the government will move to strengthen Australia’s merger laws, which will benefit Australian consumers and businesses of all sizes, as well as the wider economy,” ACCC chair Gina Cass-Gottlieb said.

“Higher prices, less choice and less innovation can result from weakened competition. Stronger merger laws are critical to ensure anti-competitive mergers do not proceed.”

“These proposed changes are significant and will reinforce public confidence in Australia’s competition laws.”

The ACCC has called for reform to the merger system in submissions to the Treasury Competition Review, which kicked off in August last year, and first proposed the idea in 2021.

Dr Chalmers acknowledged the that some in the business community were opposed to merger law change when it was first pitched. 

The new system is expected to be implemented from January 2026.

In response

Debate is likely to rage over the proposed changes to merger law, despite Australia's place as one of few only three Organisation for Economic Cooperation and Development countries without a mandatory checking system in place. 

The proposal has the critical support of the Business Council of Australia, which said it achieved a balance between economic and regulatory needs but warned close consultation would be needed to ensure unintended consequences are avoided. 

“This is a significant piece of reform, and we are encouraged that the government has listened to business and taken on our concerns regarding the importance of outcome certainty, timeliness and transparency,” Business Council chief executive Bran Black said.  

“There is still a lot of detail that is to be determined and further consultation will be required with business on many important elements in this package.

“When implementing this reform, we need to ensure Australia’s merger regime doesn’t add further red tape to businesses. For example, the BCA expects to see reasonable and practical thresholds for merger notification.”  

Allen & Overy partner Peter McDonald said the proposal was a major change for the system in Australia, but predicted it would result in a functional system.

“It will permanently alter how we assess and make merger filings – new thresholds will need to be assessed; new types of information provided; and new fees will be paid,” he said.

“For larger companies and larger deals, the costs associated with merger control in Australia will increase.

“However, from a substantive point of view, international practice tells us that this type of system can work, and work well. 

“So, while there will be a hot debate on the detail, and practical teething issues, I do not think the sky will fall. I am confident we will end up with a sensible, well-functioning system.