Rethinking Convergence: The ACCC’s Strategic Shift in Merger Policy and Enforcement Approach

Australia Overhauls merger Laws: A Seismic Shift for Businesses

Canberra – Australian businesses are bracing for a fundamental conversion in how mergers and acquisitions are regulated, with sweeping reforms scheduled to take effect in January of next year. Parliament approved the changes in late 2024, marking the most substantial overhaul of the nation’s merger control regime in over half a century.

From Voluntary to mandatory: A New Era of Scrutiny

The core of the new legislation centers on transitioning from a voluntary to a mandatory and suspensory merger notification system. Currently, companies are not legally obligated to inform the Australian Competition and Consumer Commission (ACCC) before finalizing a merger. This will change.The revamped system ensures the ACCC has substantially increased oversight of M&A activity, with thorough investigations occurring before deals are allowed to proceed.

A spokesperson for the ACCC explained that the previous voluntary system permitted some businesses to avoid scrutiny of potentially anti-competitive transactions. Moreover, deals where frequently enough completed – or threatened – before the ACCC could complete its review.

Key Changes and Thresholds

The legislation introduces two pivotal changes. Firstly, it establishes a mandatory notification requirement, compelling businesses to alert the ACCC before pursuing certain mergers. Secondly, it implements a suspensory rule, halting the completion of a notified merger until the ACCC grants formal approval. This contrasts sharply with the current process,where deals can move forward even while under review by the regulator.

However, not all mergers will trigger these requirements. Companies must notify the ACCC if they meet all three of the following criteria: the deal has Australian operations; the combined turnover of the merged entity exceeds $200 million AUD; and either the target business or its assets generate over $50 million AUD in Australian revenue, or the deal’s value surpasses $250 million AUD.Additional rules govern large mergers, serial acquisitions, and transactions involving supermarkets.

Criteria	Threshold
Australian Operations	Required
Combined Turnover	>$200 million AUD
Target Revenue/asset value	>$50 million AUD or >$250 million AUD deal value

Impact on the Resources Sector and Beyond

Legal experts anticipate the new rules will notably effect mid-tier resource companies, a segment that has seen meaningful merger activity recently, particularly in Western Australia’s gold sector. according to Hamilton Locke partner Deanna Carpenter, the financial thresholds may exclude smaller exploration companies, but mid-market players will undoubtedly feel the impact.

Interestingly, initial engagement with Western Australian mining companies suggests a lack of full awareness regarding the specifics of the new regime. Carpenter noted she had received surprisingly few inquiries, indicating a need for broader education within the industry.

ACCC Preparedness and Implementation

The influx of merger notifications will significantly increase the ACCC’s workload. The commission is proactively addressing this by planning to hire 80 new staff members and developing new IT systems to streamline the review process. A phased approval timeline is being introduced, aiming for initial assessments within 30 business days, with more complex cases potentially requiring up to 90 days. Notification fees will range from approximately $57,000 to $1.6 million, depending on the complexity of the assessment, with exemptions for small businesses.

Did You Know? The ACCC currently handles more mergers annually than the European Commission,despite Australia’s significantly smaller population.

Concerns and Considerations

Some advisors have expressed concerns that the new rules might be overly restrictive, potentially deterring foreign investment. Others point to the increased administrative burden on businesses. The ACCC maintains its commitment to fostering fair competition and protecting consumers, stating it has no intention of obstructing sensible transactions.

Beyond regulatory changes, shareholder activism and Environmental, Social, and Governance (ESG) considerations are gaining prominence in the M&A landscape. Shareholder activism has been increasing, with a 25% success rate in resolving campaigns in 2024. Additionally, due diligence processes are now routinely incorporating ESG risk assessments, particularly concerning native title and heritage agreements.

Long-Term Implications for M&A Activity

The long-term effects of these changes are likely to be multifaceted.Increased regulatory scrutiny could lead to fewer mergers but those that do proceed are likely to be more thoroughly vetted, potentially resulting in more sustainable and competitive market structures. Companies will need to prioritize proactive planning, comprehensive due diligence, and close collaboration with legal counsel to navigate the new landscape effectively.

Pro Tip: Begin reviewing your M&A strategy now to ensure compliance with the new requirements. Engage legal counsel early in the process to assess potential implications.

Frequently Asked Questions

• What is a ‘suspensory दिसंबर’ merger? A merger that cannot be completed until the ACCC provides its formal approval.
• What are the financial thresholds for merger notification? A combined turnover of over $200 million AUD, and either target revenue/asset value exceeding $50 million AUD or a deal value above $250 million AUD.
• Will small businesses be exempt from these new rules? Small businesses may be exempt from the higher notification fees.
• How long will the ACCC take to review a merger? Initial assessments are expected within 30 business days, with more complex cases potentially taking up to 90 days.
• What is the role of shareholder activism in M&A deals? Shareholders are increasingly using their voice to influence transaction outcomes, focusing on issues like valuation and ESG concerns.
• How are ESG considerations impacting mergers and acquisitions? Buyers are now routinely assessing ESG risks during due diligence, including native title and heritage agreements.
• What should businesses do to prepare for these changes? Companies should review their M&A strategy,engage legal counsel,and proactively assess potential implications.

What impact do you think these changes will have on innovation within the Australian market? do you believe the new regulations will effectively protect consumers and promote competition?

Share your thoughts in the comments below!

How dose the ACCC’s “convergence” approach differ from its conventional focus in merger policy?

The Evolving Landscape of Competition Law

For years,Australian competition policy has operated under a framework emphasizing a relatively narrow definition of market power. The Australian Competition and Consumer Commission (ACCC) traditionally focused on direct competitors within clearly defined product markets.However, a subtle yet important shift is underway – a move towards a more holistic, “convergence” approach that considers broader market dynamics and potential harms beyond traditional competitive constraints. this isn’t about abandoning established principles, but rather augmenting them to address the complexities of the modern economy, especially in the digital age. Key areas driving this change include digital platform dominance,the rise of data as a competitive advantage,and increasingly complex supply chains.

beyond Horizontal Mergers: Expanding the Scope of Scrutiny

Traditionally,the ACCC’s merger review process heavily scrutinized horizontal mergers – those between direct competitors. While this remains a priority, the ACCC is demonstrably increasing its focus on:

Vertical Mergers: Acquisitions involving companies in different stages of the supply chain. These can raise concerns about foreclosure – where the merged entity restricts access to essential inputs or distribution channels for rivals.

Conglomerate Mergers: Acquisitions between companies operating in unrelated markets. The ACCC is now more willing to investigate these deals if they could lead to anti-competitive effects, such as coordinated effects or the removal of a potential competitor.

Acquisitions of Nascent Competitors: The ACCC is paying closer attention to large companies acquiring promising startups that could become significant competitors in the future. This is particularly relevant in fast-moving tech sectors.

This broadened scope reflects a recognition that competition isn’t always head-to-head.A dominant player can stifle innovation and harm consumers by simply eliminating potential challengers before they gain traction. Competition enforcement is adapting to this reality.

The Rise of Collective Acquisitions & Authorisation

A recent example highlighting this evolving approach is the ACCC’s authorisation of collective action. On august 13,2025,the ACCC granted authorisation AA1000696 to the Victorian Water Industry Association and 15 Victorian water corporations. This allows them to collectively acquire and/or generate Australian Carbon credit Units (ACCUs).

This decision demonstrates a willingness to allow collaboration where it demonstrably benefits the public interest – in this case, supporting environmental sustainability – while still ensuring competitive safeguards are in place. It’s a departure from the traditional emphasis on individual firm conduct and signals a more nuanced approach to market competition.

Data and Digital Markets: A New Frontier for Enforcement

The ACCC’s Digital Platform Services Inquiry (2019-2020) laid bare the immense market power wielded by digital giants like Google and Facebook.A core finding was that data is a crucial competitive advantage, and the accumulation of vast datasets can create significant barriers to entry for rivals.

This has led to:

Increased Scrutiny of data-Driven Mergers: The ACCC is now more likely to investigate acquisitions that would give a dominant player access to even more data, perhaps solidifying their position.

Focus on Self-Preferencing: Concerns about platforms favoring their own products and services over those of competitors are being actively investigated.

Exploration of Data Portability and Interoperability: The ACCC is advocating for measures that would allow consumers to easily switch between platforms and take their data with them, fostering greater competition.

Digital competition law is rapidly evolving, and the ACCC is at the forefront of this change.

Practical Implications for Businesses

What does this shift mean for businesses operating in Australia?

1. Broaden Your Competitive Assessment: Don’t just focus on direct competitors.Consider potential rivals, nascent competitors, and the broader ecosystem in wich you operate.
2. Anticipate Increased Scrutiny: If you’re considering a merger or acquisition, be prepared for a more thorough review by the ACCC, particularly if it involves data, digital platforms, or vertical integration.
3. Proactive Engagement with the ACCC: If you believe a proposed transaction could raise competition concerns, consider engaging with the ACCC early in the process to discuss potential remedies.
4. Understand Authorisation Pathways: Explore whether collective action or collaboration with competitors could be beneficial, and if so, understand the requirements for obtaining ACCC authorisation.
5. Data Governance & Compliance: Ensure robust data governance practices are in place to comply with evolving privacy and competition regulations.

The Role of Collective Bargaining and Industry Associations

The ACCC’s authorisation of the Victorian water corporations’ collective acquisition of ACCUs highlights a growing acceptance of collective bargaining and the role of industry associations in addressing shared challenges. This trend is highly likely to continue, particularly in sectors facing significant market power imbalances or needing to address collective issues like sustainability. though, authorisation is not automatic; the ACCC will carefully assess whether the benefits of collective action outweigh any potential anti-competitive harms.

Navigating the New Paradigm: Key Considerations for M&A

Mergers and acquisitions (M&A) are becoming increasingly