Chapter 2Views on the bill
2.1This chapter examines inquiry participant views on the provisions of the Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024. It is informed by the bill’s Explanatory Memorandum, submissions received by the inquiry and evidence provided at the public hearing on 30 October 2024.
2.2Evidence to the committee indicated broad support for a move away from the current merger control framework to a mandatory and suspensory administrative system for acquisitions, with the Australian Competition and Consumer Commission (ACCC) as the first instance administrative decision maker.
2.3Stakeholders expressed general support for the proposed new regime, with many recognising how it is likely to meet the government objectives of a faster, stronger, simpler, more targeted, more transparent and streamlined approach to merger control.
2.4Many stakeholders also commended the Treasury for a comprehensive consultation process, conducted over an extended period, and were generally positive about the resulting considered changes following the exposure draft.
Timeliness
2.5The committee was advised that the bill will result in more timely consideration of mergers compared to the current system, with set timeframes for ACCC consideration of acquisitions.
2.6Ms Alice Bailey, Senior Economist at the Business Council of Australia, for example, argued:
In relation to the informal clearance regime, there were no timelines associated with that. This bill provides a framework around the timeframe through which acquisitions will be assessed. I think that will assist businesses to more confidently help bring their measures forward.
2.7The Tech Council of Australia similarly noted the bill presents welcome improvements around certainty of review timing. Ms Madeline Houghton, Policy Manager at Tech Council of Australia explained:
You can see from some of the ACCC's public register that there's a huge variation in the length of time that merger reviews take. This makes it very difficult to make transactions in Australia where there's an almost completely uncertain timeframe for when you're going to get the ACCC's view on the acquisition.
2.8The Australian Investment Council stressed that ‘certainty and speed are critical to investing, particularly when there is a competitive process to acquire a business.’ They noted that the bill ‘enhances some clarity around the ACCC's assessment timeline, some much-needed predictability and efficiency for merger reviews.’ Ms Siew Lee Seow of the Australian Information Industry Association (AIIA) explained that ‘by limiting its capacity to stop the clock during reviews, it has created a system that is more in tune with the pace of modern business needs, especially in the tech sector.’
2.9A number of stakeholders, including the Endeavour Group and Tech Council, expressed concerns that the statutory timelines as detailed in the bill continue to provide the ACCC with ‘unnecessarily broad discretion to delay, extend, pause or restart the assessment process’, which is likely to push out the set timelines. Endeavour Group argued that merger parties need realistic timeframes to respond to ACCC information requests, noting the requests are often broad reaching and resource intensive to compile.
2.10The Tech Council of Australia raised concerns about what it described as the ACCC’s ‘unfettered ability to make further information requests, and those have significant impacts on the timing.’
2.11Ms Gina Cass-Gottlieb, Chair, ACCC, reinforced that the ability for the ACCC to extend timeframes is limited to situations where the ACCC have issued a mandatory information request and the party has not answered after 10business days.
2.12The Business Council of Australia (BCA) advised the committee that concerns with the exposure draft around the ACCC’s discretion to ‘stop the clock’ and ‘restart the clock’ during determinations have largely been addressed with additional limits on the use of these measures. However, the BCA highlighted the need for improved reporting on the use of the provisions, given timeliness is one of the key objectives of the proposed new system. They explained:
The BCA has previously recommended that detailed data be captured and collated on an aggregate basis for the use of section 155 notices in merger and acquisition review, and “stop the clock” and “restart the clock” frequency and where relevant, duration.
While we note that Section 171 of the Competition and Consumer Act 2010 (Cth) provides for annual reporting of the issuance of requests under section 155, reporting is aggregated across all aspects of the ACCC’s activities under the CCA and not particular to merger review. Nor does it capture the duration of “stopped clocks” or other discretionary decisions concerning “restarting” the clock.
2.13Ms Cass-Gottlieb advised the committee that the use of the provisions to stop and start the clock during an assessment will be transparent as each time that discretion is used it will be published on the register. She also advised that the ACCC will include in its implementation plan a commitment to report on the use of that extension ability.
2.14The committee was advised that upfront information requirements need to be clear, well defined and adhered to, thereby reducing the need for subsequent requests and ensuring set review timeframes do not need extension.
Stronger, simpler and more targeted
2.15Inquiry participants advised the committee that the bill introduces a more effective regime with a mandatory standardised notification system, scalable review mechanisms and the ability for the ACCC to make binding decisions.
Mandatory notification
2.16Evidence to the committee strongly supported the introduction of mandatory notification to the ACCC of acquisitions that fall within set thresholds, in line with the majority of well-established merger control schemes internationally.
2.17Mr Rodney Sims AO, former Chair of the ACCC and member of the Competition Review Expert Panel, highlighted how the ACCC does not currently see all relevant acquisitions. He advised:
I've been stunned, as we've gone through this process, how many transactions the ACCC hadn't seen that it wasn't aware of—obviously that it hadn't seen. So a mandatory system, as the rest of the world largely has, is very important.
2.18The Tech Council highlighted that under the existing system, it was unclear when a merger should be notified to the ACCC. They argued:
Having clear thresholds set for when transactions need to be notified would really improve certainty for companies that really want to do the right thing in notifying to the ACCC or not. The current system is very complex and uncertain for companies making that decision.
Economic assessment
2.19Stakeholders expressed support for the new administrative review mechanism, noting it will bring a more economic focus to the assessment. For example, former ACCC Chair, Professor Allan Fels AO, noted ‘the key change is to move merger decision-making from the courts to the ACCC. This will mean more economics and less legalism.’
2.20Mr Sims also argued the bill will bring better economic outcomes. He highlighted failings of the current system:
…a first instance court room litigation does not work where you're trying to get evidence that something is anticompetitive and that thing hasn't happened yet. It's a merger; it hasn't happened. That works fine when you're dealing with cartels and the misuse of market power and things like that, where the event has happened, but, in a merger, it hasn't.
2.21The ACCC’s Statement of Goals for Merger Reform Implementation similarly notes the bill is adopting a risk-based approach, making use of enhanced data and economic analysis ‘to identify risks to the community, including any risks of long-term harm to consumers which the ACCC will take into account in reaching a final determination on each merger.’
Notification waiver
2.22The bill empowers the ACCC, upon application, to grant a binding ‘notification waiver’ to remove the obligation for merger parties to notify in appropriate cases’,with details to be provided by legislative instrument. The ACCC submitted, for example, that an acquisition that has minimal competitive overlap and no vertical integration may be suitable to be granted a waiver.
2.23The Property Council of Australia welcomed the reintroduction of the notification waiver provisions for low-risk non-contentious mergers, recommending Treasury consult on the details of the waiver process including associated fees and reporting requirements as soon as practicable.
2.24The BCA supported the provisions, arguing that to be effective the assessment process must be swifter than Phase 1 notification and require less information than notifiable acquisitions. The BCA also submitted that a number of matters need to be resolved in the development of the legislative instrument, such as:
…clarifying the interplay between the waiver process, pre-notification consultation, and Phase 1 determination, and the volume of information that it will be necessary for merger parties to provide to satisfy the ACCC that a waiver is available.
2.25Shopping Centre Council of Australia called for the bill to explicitly provide protection from retrospective action taken under section 50 of the Competition and Consumer Act 2010, ‘[g]iven the proposed notification waiver under section 51ABV would be granted after consideration of the likelihood of an acquisition substantially lessening competition.’
Control exemption
2.26The bill includes notification exemptions for acquisitions that do not result in control of the target (within the meaning of section 50AA of the Corporations Act2001).
2.27The ACCC expressed concern in its submission that:
… by itself, this exception from the notification requirements is overly broad and introduces a risk that some important types of transactions that have the potential to impact Australia’s competitive landscape will not be notified to the ACCC.
2.28However, the ACCC noted that to address this risk the bill:
…enables the Minister to determine, by legislative instrument, a class of acquisitions which are required to be notified and will not be able to rely on the control exception.
2.29The BCA expressed support for this measure, describing it is ‘a sensible and workable way of determining control for the purposes of the merger regime recognising that 50AA is a well-understood provision in accounting and law.’
2.30Mr Sims advised that the current provisions are ‘a good place to start’, explaining:
This is something that could be looked at, but it's pretty similar to the approach taken now. So I'm not concerned about it, but, if it turns out to be a concern, this is something that the review can pick up. It's been a result of the consultation, and I think it's a positive that that consultation has been listened to and adjustments have been made.
Substantial lessening of competition test
2.31As noted in the previous chapter of this report, the bill includes a ‘substantial lessening of competition’ test to assess notified acquisitions.
2.32The Council of Small Business Organisations Australia (COSBOA) welcomed the test and ‘additional consideration of relevant markets in which the parties compete or operate in’. COSBOA advised that it is also important that ‘the ACCC considers economic factors when assessing risk to competition.’
2.33The BCA welcomed the Explanatory Memorandum’s articulation of the competition assessment to focus on ‘the competitive impact of acquisitions, based on economic and legal analysis of evidence, information and data’. The BCA supported the revised definition of substantially lessening competition, noting the bill:
…makes clear that the focus of the competition assessment is around the question of whether a merger or acquisition would result in a substantial lessening of competition in a market whilst articulating issues that the ACCC may consider including the competitive effect of the acquisition within the context of the market structure (51ABZH(4)) and cumulative acquisitions in the same or substitutable goods or services market (51ABZH(6)).
2.34The AIIA expressed concerns with the definition of ‘Substantial Lessening of Competition’ and called for further clarity on how the terms ‘creating, strengthening, or entrenching a substantial degree of power in the market’ will be measured and assessed. They argued that without clear guidelines there is a risk of inconsistent application of the law, ‘leading to uncertainty for businesses and potentially hindering legitimate commercial activities’.
2.35The Tech Council echoed concerns regarding:
…changes to the substantial lessening of competition test where the focus will tend to shift away from actual changes in competition to simple increases in market share, reducing the relevance of this assessment.
2.36The AIIA explained the test poses additional concerns for the tech sector ‘because it could include the consideration of market concentration’ and ‘unlike traditional industry, the tech sector faces strong, fierce competition and relatively low barriers to entry which shift the competitive landscape rapidly’.
2.37Professor Fels submitted that the current law requires the ACCC ‘to prove in a court of law that the merger would substantially lessen competition’ and argued that the bill significantly improves the test relating to which mergers should be rejected. He explained that courts ‘struggle with attempts to prove future economic outcomes of complex mergers’. Further, Professor Fels submitted that:
…the current legal interpretation of the words “substantial lessening of competition” has led to more of a focus on the uncertain and hard to ascertain likely behaviour of a market sometime in the future. The more tangible and immediate effect on the degree of concentration and the structure of the market has tended to be downplayed.
Creeping acquisitions
2.38The bill allows for consideration of the cumulative effect of all mergers within the previous three years where they ‘may have the effect of substantially lessening competition when considered as a whole.’
2.39The ACCC advised the draft thresholds aim to address creeping acquisitions:
A priority for the ACCC has been to ensure that the monetary thresholds are capable of capturing the types of mergers that have historically raised significant competition concerns. One key area is the acquisitions made by the largest companies, frequently via serial acquisitions of smaller competitors. It is important to the ACCC that the monetary thresholds do have a targeted application to this set of transactions where data shows that the top 1% of companies make the majority of acquisitions.
2.40The Tech Council welcomed the proposed approach to serial acquisitions, which ‘more clearly targets horizontal acquisitions or acquisitions of similar products or services’ compared to the approach proposed in the exposure draft of the legislation.
2.41The Law Council of Australia submitted that smaller transactions that may raise concerns, such as with serial acquisitions in particular sectors, should be the subject of targeted thresholds through Ministerial determinations, not via lowering of the monetary thresholds applicable to all mergers.
2.42Mrs Adele Sutton of COSBOA noted that once there is more transparency of the types of acquisitions being notified to the ACCC, it will become clearer whether the three-year serial acquisition timeframe is appropriate, given there is not a lot of transparency around how the current informal review regime works unless there is a statement of objections.
Public benefit test
2.43The committee received evidence in support of provisions that enable the ACCC to approve an acquisition that would likely have the effect of substantially lessening competition ‘if the Commission is satisfied it would be likely to result in a public benefit that outweighs the public detriment’, upon application by the parties.
2.44The BCA advised the committee that it advocated for the public benefits provisions,explaining:
The BCA supports this approach recognising that where an acquisition provides a net benefit to the community it is appropriate that parties are able to put the acquisition into effect. This is particularly important noting Treasury’s merger reform proposal identified that “the Australian economy is undergoing significant structural shifts including the rise of the care economy, rapid transformation to net zero, and the growth of the digital economy.
2.45COSBOA supported the policy intent behind the provision; however, it also stressed the importance of the ACCC properly considering the small business impact. They explained ‘it would be useful to include a small business impact section on the application form and in the public benefit guidelines that will be determined by the Minister.’
Deeming provisions
2.46The Property Council of Australia submitted that the bill as drafted would see substantial public benefit applications deemed to have been refused if the regulator does not make a determination within the set timelines. The Property Council of Australia explained:
This is a perverse outcome and could incentivise the regulator to continue referring applications onto the next stage of assessment, collecting an additional fee. This is further compounded by the decision to set the standard for the regulator’s decision as ‘satisfied’.
2.47They argued that the process for considering substantial public benefits applications should be amended to enable the acquisition to go ahead if the ACCC does not make a determination within the set period, aligning the provisions with those in Schedule 1, item 39, subsections 51ABZB(2)and(3) of the Competition and Consumer Act 2010 (CCA).
Confidential review process
2.48The bill introduces confidential review processes for certain acquisitions, specifically:
Surprise hostile takeover bids involving the acquisition of shares in a body corporate; and
Certain acquisitions involving voluntary transfers under the FSTR Act.
2.49The Law Council and the Australian Investment Council welcomed the confidential review process but raised a range of concerns with the drafting of particular provisions.
2.50The Law Council argued some provisions are unduly restrictive and do not reflect the true nature of public markets transactions. For example, they proposed that that the confidential review provisions should extend to hostile surprise conditional takeovers, noting these are the majority of surprise takeovers, and queried whether there is a policy basis for excluding these from the confidential clearance regime.
2.51Further, the Law Council called for drafting changes to Section 51ABZZL(2), arguing a bidder should not be compelled by the Act to make a bid if the determination under 51ABZE(1)(a) is subject to conditions unacceptable to the bidder, in line with other (non-takeover) transactions.
2.52The Law Council also argued that the provision is overly prescriptive, requiring the bidder to ‘give a bidder’s statement to the target within 1 business day after the day the Commission gives the notifying party written notice of the determination’ regardless of circumstances that may see the bidder choosing not to proceed.
2.53The Law Council argued that the 17 business-day confidential review period is too short ‘given that the phase determination period for a notification is 30business days after the effective notification date’. The Australian Investment Council shared these concerns and called for greater flexibility, with a provision to enable extensions to confidentiality ‘where it may be necessary to further consider the potential takeover’, explaining:
This may occur, for example, if while the ACCC was reviewing, the market changed significantly, and it became necessary for the potential buyer to allow markets to stabilise before proceeding. In this context, 17 business days may be too short.
Effectiveness of penalties
2.54Submissions noted the importance of effective and commensurate penalties for non-compliance.
2.55Dr Barbora Jedlickova commended the inclusion of ‘penalties for not registering mergers and acquisitions once they meet certain requirements and/or threshold(s), not providing information or providing false information,’ noting the importance of such penalties in supporting an effective mandatory regime. However, Dr Jedlickova advised that further consideration is needed on ‘whether the proposed remedies are effective enough to deter parties of mergers and acquisitions from doing these.’
2.56The Tech Council of Australia submitted that the penalties for failure to notify are too extreme and ‘significantly out of step with international best practice.’ They argued that the provisions should be amended, recommending:
The penalties for failure to notify the ACCC of a transaction should involve a flat monetary penalty, and, where the transaction has already completed, it could be appropriate for the ACCC to have the power to seek an order from the Federal Court to unwind all or part of the transaction.
Tribunal review
2.57The Office of the Australian Information Commissioner (OAIC) welcomed the provisions for merit reviews of ACCC decisions by the Competition Tribunal, noting it supports the bill’s intent to promote integrity and good decision making. They stated:
Administrative review is integral to our democratic values and rights. Ensuring the right of review by a Tribunal with appropriate competition expertise will further enhance the quality and transparency of decision-making in respect of proposed acquisitions and promote government accountability.
2.58The BCA advised that the opportunity to seek review of an ACCC determination provides an important “check-and-balance” on the ACCC’s decision making, and ‘will over time engender confidence in the merger review system’. However, they highlighted that for many time-critical transactions, ‘a portion of deals will be timed out in a commercial sense even if parties believe there are compelling grounds for appeal,’ so the Tribunal’s review function will ‘not serve directly as a safeguard for all notifiable acquisitions, but only those with flexible transaction timeframes.’
2.59The BCA submitted that the bill has improved procedural fairness, including provisions for parties to provide additional information, documents or evidence
…subject to the discretion of the Tribunal (100S) provided the material did not exist at the time the ACCC made its determination or where the material is relevant to the ACCC’s decision, but parties were not provided a reasonable opportunity to respond to.
2.60They advised the committee that this is ‘an important procedural safeguard’ for parties and supports decision-making based on all material information, documents and evidence. The BCA expressed support for the inclusion of clear criteria for consideration of applications for leave to appeal a determination at the Tribunal (100C(4)).
2.61Similarly, the Endeavour Group commended the ‘discretion provided to the Tribunal to permit parties to provide new information relevant to the ACCC determination if they were not given reasonable opportunity to make submissions during the ACCC review.’
Transitional arrangements
2.62The bill provides for transitional arrangements for ‘parties who have sought and obtained clearance or authorisation before the commencement of the new system,’ including a 12-month period for parties to complete their transactions.
2.63The BCA supported the provision for voluntary notification of acquisitions from 1 July 2025 and the provisions for parties who have already obtained a merger authorisation or written ACCC advice to be granted 12 months to put the transaction into effect.
2.64The Law Council of Australia welcomed the introduction of the voluntary notification period from 1 July 2025. However, the Law Council called for the commencement date to be pushed back by six months to allow for adequate consultation and finalisation of the rest of the framework, and for systems and processes to be prepared to enable a smoother transition.
More transparent
2.65The bill aims to improve transparency in the merger control framework, particularly ACCC visibility of acquisitions.
2.66The OAIC expressed support for the policy intent of the bill to improve the transparency and predictability of the merger control system. It explained:
Measures to improve the transparency of decision-making in respect of proposed acquisitions will promote sound governance and better public outcomes, ensuring that the Australian community can have confidence that notified acquisitions are subject to strong and independent regulatory oversight.
2.67In particular, the OAIC commended the transparency afforded by the public register of notified acquisitions the ACCC will be required to maintain. The OAIC emphasised that the establishment of the public register of notified acquisitions ‘will ensure the community is given timely information about acquisitions, including any determinations made and a statement of reasons.’ They explained to the committee that this will ‘support the right to access information and will complement protections under the FOI Act.’
2.68Ms Bailey of the BCA similarly noted that one of the strengths of the revised merger control framework is around increased transparency. She argued ‘under the existing regime—particularly the informal merger clearance regime—there are elements that are not transparent.’
Capturing unlisted companies
2.69The committee heard from Dr Kerry Schott, panel member of the Competition Expert Advisory Panel, that the ACCC also has very little visibility of unlisted companies and needs more transparency. She explained:
The other area is the huge increase in unlisted companies in Australia. Unless you're listed on the stock exchange, the ACCC at the moment really has very little vision of what's going on in that unlisted sector. It's a growing sector, and there's nothing wrong with it, but it does need to be notifying so that there's more transparency.
2.70The ACCC noted there is a provision for the minister to determine by legislative instrument ‘a class of acquisitions which are required to be notified and are not able to rely on the control exemption’.
2.71The Treasurer indicated in his second reading speech an intention to use the special sector designation provisions to enable ACCC scrutiny of purchases of an interest above 20 per cent in an unlisted or private company if one of the companies has turnover of more than $200 million.
2.72The ACCC advised it provided the Treasurer with advice to ‘limit the control exception in the case of unlisted private companies, which will include private equity’. It submitted that:
The ACCC supports the Government’s announced intention to use this process to limit the scope of the exception. The ACCC considers that this is important to ensure it is able to adequately scrutinise acquisitions that meet the monetary notification thresholds and result in certain changes in the nature of control or, for unlisted or private entities, result in the acquirer holding more than 20% voting power.
Transparency of decision-making
2.73The BCA observed that the proposed new system will provide parties with clear reasoning for ACCC determinations, and parties will also be able to benefit from the publication of reasonings for other acquisitions ‘which will overall assist business to understand how to engage in the regime.’
Reporting
2.74The bill introduces additional reporting obligations on the ACCC relevant to the new merger control framework, including waiver applications, notifications of acquisitions, acquisitions subject to Phase 2 review, determinations that required conditions and the nature of the conditions.
2.75The BCA welcomed the additional annual reporting requirements on various performance metrics of the merger review system, particularly for ‘details of notification waivers made, notified acquisitions, notifiable acquisitions subject to Phase 2 determination, and acquisition determinations subject to conditions.’ Ms Bailey noted:
This is a significant responsibility, the operation and management of the administrative merger review system, and we think it is appropriate that there is transparency around how it is being administered.
2.76The BCA further argued that there is an opportunity for performance information to be provided on a more frequent basis, recommending quarterly reporting.
2.77The AIIA proposed a regular mandated review of the ACCC processes and timelines, ‘with transparent reporting on efficiency and alignment with the objective of fostering competition’ to ensure the effectiveness and relevance of the system.
Review
2.78The bill requires a review of the framework after three years of operation. The Explanatory Memorandum notes this ‘will allow for timely assessment of the functionality and efficiency of the new system to ensure that it is operating as intended.’
2.79Ms Cass-Gottlieb advised the committee that at three years the ACCC ‘will be able to make a meaningful assessment of a mature regime against the benefits that the government, the parliament and the business community want to see from this reform.’
2.80The Shopping Centre Council of Australia submitted that reviews of the provisions should be conducted independently of Treasury and the ACCC.
Resourcing of the ACCC
2.81To achieve the stated intent of a faster, stronger, simpler, more targeted, more transparent and streamlined approach to merger control, stakeholders emphasised that the ACCC would need to be adequately resourced and skilled.
2.82The BCA submitted that:
In addition to the primary legislation that is subject to consideration by the Committee, the merger review regime will be dependent on a range of legislative instruments and the operation and resourcing of the institutions responsible for administering the regime – the Australian Competition and Consumer Commission and the Australian Competition Tribunal.
2.83Dr Kerry Schott advised that, given the mandatory notification requirements and the thresholds, the ACCC needs more economic resources to review notified acquisitions expediently - within the first 15 days. She noted the ACCC has received additional resources to hire additional personnel.
2.84Ms Cass-Gottleib advised the committee that the ACCC has received $3.5million to be prepared for 30 June next year and is already in the process of recruiting additional economists. She also advised:
…looking at 2025-26 through to 2027-28, we have received a $57 million increment from our current $16.5 million. That is, roughly, funding for an additional 81 staff on top of our current 65.
2.85The Shopping Centre Council of Australia emphasised the critical stewardship role of the ACCC. They submitted:
In some respects, it is less that the ACCC is well resourced but that there is clarity for notifying parties (again, much of which relies on further legislative instruments), that the ACCC has appropriate expertise on what ‘markets’ they are assessing and how (e.g. market studies), and the administrative burden and expectations placed on a notifying party in terms of required studies, other information requirements, along with any potential conditions may be imposed on parties.
2.86The Property Council of Australia similarly advised that the regulator must be ‘appropriately resourced and educated on the key property-related matters of interest, such as concerns around access to markets and land banking.’
2.87The BCA advised that the ACCC appears to have been given a significant allocation of resources and hoped the scheme will therefore mature as quickly as possible to avoid detrimental effects on the economy.
Subordinate legislation matters
2.88Although stakeholders expressed support for the bill and the shift to a mandatory and suspensory administrative system, many noted that the application and effectiveness of the new framework would turn on the provisions of the subordinate legislation.
2.89The BCA, for example, argued the bill is heading in the right direction and is an improvement from the exposure draft previously presented for consultation, but suggested the proof will be in the implementation.
2.90The Shopping Centre Council of Australia echoed this sentiment, submitting that the bill does not provide a full indication of how the proposed reforms would be applied in practice and that the bill is largely ‘enabling’ legislation. They noted:
…the Bill makes 21 references to ‘legislative instruments’ that can be made, subject to the passage of the Bill. These include instruments on central elements of the reform that would be determined potentially after the Bill is considered and passed by the Parliament.
These include potential legislative instruments in relation to:
classes of acquisitions,
notification thresholds,
targeted Ministerial Determinations,
notification waivers,
fees, and
acquisitions register.
2.91Most stakeholders highlighted their intention to continue their involvement in consultation on the bill including on draft subordinate legislation.
2.92In light of this, the committee received evidence from a range stakeholders discussing the merits of potential subordinate legislation provisions and settings.
2.93A range of stakeholder concerns on matters related to the subordinate legislation are discussed below.
Timeliness of drafting
2.94The committee received evidence urging timely drafting of subordinate legislation.
2.95The Property Council of Australia, for example, argued that drafting of subordinate legislation should take place concurrently with the passage of the legislation to maximise consultation times and ‘to provide certainty to industry,’ as well as to meet the stated 1 January 2026 commencement date and the voluntary opt-in transition period from 1 July 2025.
2.96Treasury officials advised that legislative instruments for the threshold notification requirements and regarding the supermarket sector are already in the development and, should the bill pass, Treasury would be ready ‘to have those instruments ready and out for consultation.’
2.97The ACCC similarly advised that it would:
… continue to engage with Treasury regarding the details of an appropriate legislative instrument. In order to provide important certainty to business regarding the types of acquisition that will require notification to the ACCC, the ACCC considers that this should be in place in time for the commencement of the new regime, including the transition period.
Notification thresholds
2.98The bill introduces mandatory obligations on parties to acquisitions that meet certain thresholds to notify the Commission of the proposed acquisition prior to putting it into effect. Those thresholds will be determined by the Minister by legislative instrument.
2.99The Law Council of Australia submitted that the workability and effectiveness of the proposed merger control system will be critically influenced by the notification thresholds, noting a risk of ‘over-capturing and overloading’ the regime, introducing delay and uncertainty for merger parties.
2.100Ms Houghton of the Tech Council stressed that clear thresholds would improve certainty for companies wanting to do the right thing.
2.101The proposed thresholds, which will be subject to further consultation, may relate to matters such as:
the value of the acquisition or the underlying contract, arrangement, or understanding;
the turnover of a person, business, or part of a business;
the level of market concentration; or
any assets of a person.
2.102In the second reading speech, Dr Chalmers outlined details of the proposed three thresholds:
Firstly, any merger will be looked at if the Australian turnover of the combined businesses is above $200 million, and either the business or assets being acquired has Australian turnover above $50 million or global transaction value above $250 million.
Secondly, the ACCC will look at any merger involving a very large business with Australian turnover more than $500 million buying a smaller business or assets with Australian turnover above $10 million.
Finally, to target serial acquisitions, all mergers by businesses with combined Australian turnover of more than $200 million where the cumulative Australian turnover from acquisitions in the same or similar goods or services over a three-year period is at least $50 million will be captured, or $10 million if a very large business is involved.
Land acquisitions involving residential property development and certain commercial property acquisitions won't be included to avoid clogging up the system with simple land purchases unless they are captured by additional targeted notification requirements.
2.103While the notification thresholds are not included in the bill, a range of evidence to the committee discussed the merits of the proposal.
Setting of monetary thresholds
2.104Some stakeholders submitted that the proposed thresholds were too low, risking over capture or stifling innovation, with others submitting that they are too high.
2.105The Australian Investment Council and Law Council of Australia, for example, argued that the proposed threshold settings create the strong likelihood of over-capture. The Law Council explained one example of over-capture:
A monetary threshold of $10 million Australian turnover (not specific to target turnover) is likely to result in very large numbers of competitively irrelevant transactions being notified by large Australian companies (for example, investments in businesses/assets that have no connection with Australia such as joint investments by large Australian funds in overseas businesses).
2.106The e61 Institute submitted that it would be desirable for the ACCC to have the flexibility to investigate acquisitions below any new threshold as international research ‘suggests that some merging parties will seek to adapt their transactions to avoid a new reporting threshold’.
2.107COSBOA submitted that a merger regime needs to effectively capture a range of value transactions, particularly given the prevalence of small and medium sized enterprise (SME) transactions. They note the mooted $10 million threshold ‘may not be appropriate across all industries.’COSOBA explained:
We're heartened by the fact that the minister, regardless of the threshold size, has discretion and that the ACCC are putting time and resources into analysing certain industries to ensure that competition is protected in those local markets where it needs to be.
2.108COSBOA argued that the ministerial determinations will be important ‘to ensure that any anti-competitive effects of creeping acquisitions or smaller acquisitions of small businesses impacting local markets are properly analysed.’
2.109The ACCC advised that it supports the currently proposed monetary thresholds, noting they ‘are appropriate and will capture the vast majority of transactions the commission has identified in terms of their nature as high risk in the past.’ The ACCC further advised that:
…setting thresholds too high, particularly at the commencement of the new regime when there is limited data available to assess the efficacy of thresholds, carries the risk that many mergers likely to be of concern will proceed without scrutiny, and this would fundamentally undermine the rationale for the new regime.
2.110ACCC also submitted that ‘problematic mergers’ falling below the thresholds will be considered under the existing merger provisions in the CCA and, where appropriate, enforced via the Federal Court.
Market concentration thresholds
2.111Some submitters raised concerns about the potential use of market concentration thresholds, which are not currently proposed but remain possible under the bill.
2.112The BCA supported the notification thresholds being determined via legislative instrument, and noted that the proposed notification thresholds are not based on the level of market concentration. However, the BCA raised concerns that the bill still refers to the ‘level of concentration in a market’ and this measure could therefore be used in the future. They explained it is important for thresholds to be based on objective criteria:
…the Treasury consultation paper conceded that “using market share thresholds may create uncertainty in a mandatory merger control system” given different market definitions. The information needed to establish whether such a threshold is met will also be costly for business to acquire and submit. Moreover, parties face substantial penalties if their assessment differs from the ACCC’s…
2.113The BCA submitted that this provision should be removed and ‘an additional limb be inserted into 51ABQ(3) requiring that any class or classes of acquisitions be determined with reference to objectively quantifiable or knowable criteria.’
2.114The Law Council of Australia also advised any threshold should be clear, understandable and based on objective (quantifiable) criteria. They argued that ‘Amongst other things, this would mean not adopting any market concentration thresholds,’ stating ‘this is consistent with international best practice and the recommendations of relevant international bodies.’
2.115In contrast, the Shopping Centre Council of Australia maintained that the central focus and principal thresholds of the reform should focus on market concentration and a clear likelihood of anti-competitive outcomes. They argued the current ‘economy wide’ approach using proposed monetary thresholds gives rise to additional mechanisms to try and deal with potentially benign acquisitions.
Land acquisitions exemption for property industry
2.116Evidence to the committee supported changes to exempt residential property development and certain commercial property transactions from notification requirements, noting the extent of the carve out will be determined in subordinate legislation. However, some concerns were raised with its application.
2.117For example, the BCA expressed concerns ‘about the practical operation of the notification requirements’ given property acquisition can be the time sensitive, particularly through competitive processes like auctions. The BCA noted the risks of certain acquisitions timing out while awaiting clearance. The BCA therefore recommended that further work be done to better target notification requirements for acquisitions that concern ‘land, or an interest in land’ as part of the legislative instrument development process.
2.118Similarly, the Property Council of Australia raised concerns that, while the Treasurer’s second reading speech proposed an exemption for land acquisitions involving residential property development and certain commercial property acquisitions, this ‘is not explicitly exempted through the Bill.’
2.119To ensure subordinate legislation meets the government’s commitment to exempt certain land acquisitions, the Property Council of Australia recommended that the drafting and consultation on the subordinate legislation occur prior to the parliamentary debate and passage of the bill.
2.120The Property Council of Australia explained that the exemption is necessary to ensuring the government meets its National Housing Accord target of 1.2million homes by 2029, and that low-risk property transactions are not delayed by mandatory reporting and assessment by the regulator.
Threshold reviews
2.121The Explanatory Memorandum notes thresholds will regularly be reviewed and set with respect to evidence of the risk of potential harms to the community over time. The Treasurer further advised thresholds would be reviewed after 12months ‘to ensure they are working as intended’, a measure supported by a number of stakeholders.
2.122The ACCC advised that the review will ‘provide early opportunities to consider whether the thresholds are set at the appropriate levels and are bringing the right transactions into the merger regime.’
2.123The BCA submitted that the 12 month review of notification thresholds will help mitigate against unintended consequences, providing ‘a pathway to recalibrate the regime’ based on the experiences of both businesses and the ACCC.
2.124The Shopping Centre Council of Australia argued that the government’s commitment to a 12 month review should be embedded in the provisions of the bill.
2.125Endeavour Group welcomed the proposed review of notification thresholds after 12months, noting it should also be used to ‘ensure adequate resources are allocated to identify areas that are challenging for both the regulator and business to work through under the new system.’
2.126Endeavour Group argued that the review should also capture the ‘success or failure’ of statutory timeframes, particularly around the use of extensions and the use of ‘stop the clock’ provisions. Further, Endeavour Group argued the review should consider upfront information requirements for merger parties to ensure requests and requirements are relevant to the applicable transaction.
2.127Lastly, Endeavour Group called for the 12 month review to commit to further stakeholder consultation where changes are required arising from the review.
Committee view
2.128The committee acknowledges the wide level of support received for this bill to create a mandatory, suspensory and administrative merger control system in Australia, as well as the significant amount of consultation that has gone into the development of this bill.
2.129The committee welcomes that new powers for the ACCC will require merger parties of certain thresholds to notify the ACCC of their intention to merge and require approval from the ACCC before they can proceed. This will replace the current voluntary system which allows many mergers to be transacted without the ACCCs awareness, potentially with anticompetitive consequences.
2.130The committee especially welcomes new powers for the ACCC to address serial acquisitions to limit and have oversight of their growing and anticompetitive harms to small and medium businesses, consumers and competition in the economy.
2.131The committee notes the bill will provide assurances to the community that mergers which are not in the competitive interest of the economy or consumers are not permitted and prevented from happening, promoting better outcomes for the economy.
2.132The committee welcomes that this bill has benefitted from the Competition Review. The committee also acknowledges and thanks the Competition Review Expert Advisory Panel that provided significant input and consideration of the bill, as well as past and present ACCC Chairs who have long advocated for this style of merger system reform.
2.133The committee is encouraged by the support from the business community who will benefit from a greater level of certainty and confidence, supported by legislated approval timelines that facilitate faster and timely merger approvals by the ACCC.
2.134In particular, the committee welcomes that this bill will bring Australia’s merger control system in-line with other Organisation for Economic Co-operation and Development jurisdictions.
2.135The committee appreciates that the government has given clear indications of the Monetary Thresholds and Targeted Notifications for mergers and acquisitions which will be set by delegated legislation.
2.136The committee acknowledges the views put forward by inquiry participants about the Monetary Thresholds and Targeted Notifications, and is encouraged that the bill requires consultation and parliamentary scrutiny of these legislative instruments. The committee is also encouraged by commitments from inquiry participants to be involved in these consultation processes.
2.137Further, the committee notes that the indicative Monetary Thresholds have been chosen to reflect and align with thresholds established in the merger control systems of comparable jurisdictions.
2.138The committee re-iterates views of inquiry participants that the sooner this bill is passed by the parliament, the sooner formal consultation on the legislative instruments containing the proposed Monetary Thresholds and Targeted Notifications can begin, providing certainty to business and stakeholders. The committee further notes the comments of the ACCC Chair that the ACCC is well-primed and ready to consult, if the bill is passed this year.
2.139This bill represents one of the most significant reforms to Australian competition policy and merger settings in almost 50 years. It will create a merger control system which addresses anti-competitive mergers and encourage mergers that are in the national interest. This bill is an integral aspect of the Governments National Competition Policy to improve competition and productivity outcomes in our economy for businesses and consumers.
2.140The committee recommends that the bill be passed.
Senator Jess Walsh
Chair
Labor Senator for Victoria