On Friday 30 August 2024 the Australian Government released its much-anticipated proposed mandatory merger notification thresholds, marking a significant milestone in Australia’s shift to a mandatory merger regime.
The thresholds for Australia's proposed mandatory and suspensory regime have been released and will be open for public consultation until 20 September 2024.1 These thresholds replace the previous voluntary guidance under which notification was encouraged if the combined market share of the parties exceeded 20% in any market in Australia. The proposed triggers for mandatory notification are based on revenue, transaction size and share of supply, with additional thresholds contemplated for transactions in certain sectors or local markets.
Proposed thresholds
The proposed merger notification thresholds can be triggered by revenue, transaction size and market shares in Australia.
Monetary Thresholds
It is proposed that notification will be required where there is a material connection to Australia and if either of the two following monetary thresholds are met:
- If the combined Australian turnover of the merger parties (including the acquirer group) is at least $200 million (USD 135 million); and either
- the Australian turnover for each of at least two merger parties is at least $40 million (USD 27 million); or
- if the global transaction value is at least $200 million (USD 137 million)
OR
- If the acquirer group’s Australian turnover is at least $500 million (USD 339 million); and either
- the Australian turnover for each of at least two merger parties is at least $10 million (USD 6.8 million); or
- if the global transaction value is at least $50 million (USD 34 million).
Market Concentration Thresholds
Notification is also being proposed where mergers reach either of the two following market concentration thresholds:
- A share of 25 per cent of an affected market, where Australian turnover of at least two of the parties to the acquisition (including the acquirer group) is at least $20 million (USD 13.5 million); or
- A share of 50 per cent of an affected market, with a lower turnover requirement of $10 million (USD 6.8 million).
Additional Thresholds
The consultation on notification thresholds also contemplates Ministerial determination of specific thresholds for specific sectors or local markets of concern. The ACCC has identified groceries, fuel, liquor and oncology-radiology as sectors where potential competition issues may arise. Any additional thresholds in these sectors would be set in response to evidence-based concerns from the ACCC and subject to proposed consultation. Any resulting determination will sunset after a maximum of five years.
Business Implications
Although the final form legislation and thresholds for notification may still be subject to further amendment, it is important that businesses engage in thorough pre-transaction planning and analysis to determine whether they meet the specific financial and market share thresholds outlined.
Transitional provisions will likely apply from mid-2025 which will need to be factored into transaction completion timelines. We suggest that an assessment of whether a potential transaction is likely to trigger the thresholds should be undertaken for any transactions from now-on. Pre-notification timeframes will also be an important part of this early assessment process.
A shift from the previous voluntary system to a mandatory regime requires businesses to be vigilant in understanding their obligations to avoid legal and regulatory challenges. Fees for filing and the need for detailed documentation will become standard, making it imperative for companies to consult with legal counsel early in the transaction process. Consulting early and staying informed on the guidance that will be released by the ACCC on procedure and application of the law will be critical to successfully operating within this new regulatory framework.
Further background
On 10 April 2024, the Australian Treasurer announced its proposal to reform Australia’s merger laws, moving to a single mandatory, suspensory, administrative regime, with the ACCC as first instance decision-maker.
On 24 July 2024 the Australian Government released an exposure draft of the proposed merger legislation which included a number of substantive and procedural elements. Consultation on the proposed legislation closed on 13 August 2024.
From 1 January 2026 parties to proposed acquisitions which satisfy the prescribed notification thresholds will be required to notify the ACCC of their transaction and will be prohibited from completing their transaction until they receive ACCC approval.
1 Based on the Australian Government the Treasury data, https://treasury.gov.au/sites/default/files/2024-08/c2024-562395-consult.pdf
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