Proposed Reforms to Australian Merger Approvals

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Australian Competition And Consumer Commission,Reform,Consumers

The Australian Competition and Consumer Commission has been pushing for reform in this area for years, warning that the current model is hurting consumers and letting anti-competitive deals go ahead. This article discusses the two key reforms that will change how deals are done in Australia and the potential impact on foreign investors.

The Australian Competition and Consumer Commission has been pushing for reform in this area for years, warning that the current model is hurting consumers and letting anti-competitive deals go ahead., with their lawyers particularly concerned about what reform will do to how quickly deals are approved, and whether foreign investors come to Australia.

What these thresholds look like will be open for consultation before the government makes a decision, but Treasury suggested they would be based on typical business metrics such as turnover, profitability or transaction value. “All mergers within the previous three years by the acquirer or the target will be aggregated for the purposes of assessing whether a merger meets the notification thresholds, irrespective of whether those mergers were themselves individually notifiable,” the draft proposal said.

While it is currently on the ACCC to prove that a deal will substantially lessen competition , the watchdog had wanted companies to instead have to prove that a merger would not do this. While this is not significantly different to the current test, Labor’s competition taskforce hoped it would better enable the ACCC to consider the competitive structure of a market when looking at whether it could harm it., which the watchdog opposed but was waved through on appeal. Had the onus of proof been reversed, Transurban and ANZ would instead have had to prove the deals would not substantially lessen competition.

But if the watchdog has an issue with a deal, it will have another 90 days to review it. If the commission does not make a decision in that time, it can automatically go ahead.

 

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