Merger Control 2022 Comparisons

The relevant merger control legislation in Australia is found in the Competition and Consumer Act 2010 (Cth) (CCA). Section 50 of the CCA prohibits the acquisition of shares or assets that would have the effect, or likely effect, of substantially lessening competition in a market in Australia.

The Australian Competition and Consumer Commission (ACCC), the independent government agency responsible for enforcing the CCA in Australia, has published a range of guidance materials relevant to Australia’s merger control regime, which includes:

• ACCC Merger Guidelines 2008 (Merger Guidelines);
• ACCC Informal Merger Review Process Guidelines 2013 (Informal Review Guidelines);
• ACCC Merger Authorisation Guidelines 2017;
• ACCC Media Merger Guidelines 2017; and
• ACCC Use of Section 155 Powers.

The relevant legislation for foreign transactions and investments are the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA), the Foreign Acquisitions and Takeovers Regulation 2015 (FATR) and the Foreign Acquisitions and Takeovers Fees Imposition Act 2015 (Cth) and its associated regulations (foreign investment rules).

These laws govern the review of foreign investment proposals, including requiring certain foreign investments that meet the relevant criteria to seek approval from the Australian Treasurer. The Treasurer may block proposals that are contrary to the national interest (or national security, as applicable), or apply conditions to ensure a proposal is not contrary to the national interest (or national security, as applicable). The Treasurer’s power to approve foreign investments is administered through the Foreign Investment Review Board (FIRB).

There are additional approval requirements for acquisitions in the banking and financial services sector. Special rules in the Broadcasting Services Act 1992 (Cth) governing acquisitions in the media sector were abolished in 2017. Accordingly, acquisitions in the media sector are subject to the foreign investment rules and section 50 of the CCA. The ACCC Media Merger Guidelines 2017 supplement the ACCC’s Merger Guidelines by drawing out key areas of focus for the ACCC when assessing mergers in the media sector.

In February 2022, the ACCC raised the possibility of a digital-specific merger control regime as part of its five-year Digital Platform Services Inquiry (DPSI). However, it is unclear if this concept will progress further, including because the concepts overlap with the ACCC’s proposal for broader economy-wide merger reforms in August 2021 (see 9.1 Recent Changes or Impending Legislation).

Enforcement by the ACCC

The ACCC is the regulator that enforces and administers Australia’s merger control regime under the CCA. The ACCC has sole standing to enforce section 50.

In Australia, it is not mandatory to notify transactions to the ACCC. However, parties regularly notify transactions that fall within the thresholds set by the ACCC in its Merger Process Guidelines on a voluntary basis, including to obtain comfort that the ACCC will not intervene to seek an injunction to block the transaction. The ACCC is also free to review any transaction it wishes, including transactions that are not notified.

If the ACCC opposes a transaction because it considers that the transaction would be likely to have the effect of substantially lessening competition in contravention of section 50, the decision is not binding. However, the ACCC may enforce the decision by applying to the Federal Court of Australia (FCA) for a range of remedies. These include:

• injunctions preventing companies from completing transactions;
• forced divestiture following a merger, or orders to unwind the transaction;
• compensation for customers or competitors; and
• penalties of up to AUD10 million per contravention for companies, and AUD500,000 for individuals.

The ACCC has no independent powers to seek to prevent mergers without a court order.

In practice, if the ACCC opposes a transaction, it will generally request an undertaking that the parties will not complete. If the parties refuse to give such an undertaking, the ACCC may seek an injunction to prevent the transaction proceeding.

The ACCC is also the body that has the power to authorise a transaction, which gives the transaction statutory immunity from action under section 50.

Enforcement by FIRB

FIRB enforces the foreign investment rules. The impact on competition is a relevant factor when FIRB is considering the impact that a foreign investment proposal would have on the national interest. As a matter of practice, FIRB consults with the ACCC on the competition impacts of the foreign investment proposal and FIRB will not grant approval until the ACCC confirms it has no competition concerns.

Voluntary Notification Regime

Australia has a voluntary merger notification regime. However, in practice, parties regularly notify the ACCC of transactions in Australia. 

Guidance thresholds

The ACCC’s Informal Review Guidelines encourages notification of a merger where:

• the products of the merger parties are either substitutes or complements; and
• the merged firm will have a post-merger market share of more than 20% in the relevant market(s).

Section 50(6) of the CCA defines a market as a market for goods or services in Australia, a State or Territory of Australia, or a region of Australia. 

Although parties may proceed with a transaction without notifying the ACCC, in practice the ACCC expects to be notified of transactions that meet the above thresholds. Further, if the transaction requires FIRB approval under the foreign investment rules, ACCC notification is pseudo-mandatory and suspensory because FIRB will not approve the transaction until the ACCC has confirmed it has no competition concerns. The ACCC can also review any transactions it wishes to, even if not notified by the parties.

Industries of interest

The ACCC also encourages parties to notify or transactions within certain industries. For example, the ACCC may identify specific industries of interest in its compliance and enforcement priorities for the upcoming year, and in the course of inquiries it conducts on the direction of the Australian government.

In 2022, the ACCC’s priorities are competition and consumer issues arising in relation to:

• essential services (especially in energy and telecommunications);
• financial services, especially payment services;
• energy; and
• digital platforms.

In recent years, the ACCC has also shown particular interest in mergers in the health industry, financial services, telecommunications and digital platforms (including acquisitions by large digital platform services). See 9.3 Current Competition Concerns for further detail.

Informal Merger Clearance

Parties may seek informal merger clearance from the ACCC for a proposed transaction. Informal clearance does not provide statutory immunity. However, parties who receive clearance will obtain a letter of comfort from the ACCC that it will not take further action in relation to the transaction, provided no material facts later come to light of which the ACCC was not aware. Sections 3.5 Information Included in a Filing and 3.8 Review Process provide further explanation of the informal merger clearance processes. The vast majority of mergers in Australia are assessed under the informal merger clearance process, which remains the most flexible, convenient and relatively effective process for obtaining ACCC approval in Australia.

Merger Authorisations

It is also possible for parties to seek merger authorisation from the ACCC. This provides the parties with statutory immunity from any court action taken under section 50 of the CCA. 3 Procedure: Notification to Clearance provides further explanation on the merger authorisation process.

Penalties for Failing to Notify the ACCC

As it is not mandatory to notify the ACCC of transactions, there are no penalties for not notifying. However, even if parties do not notify a transaction to the ACCC, the ACCC can (and does) investigate transactions that it becomes aware of through other avenues (eg, complaints from market participants, FIRB, other Australian or international regulators, or the media). In these circumstances, the ACCC may take an aggressive approach to investigating the transaction, including issuing statutory notices. If it has serious preliminary concerns about the transaction, it may approach the court for an injunction to prevent completion.

Penalties for Failing to Notify FIRB

There are civil and criminal penalties for failing to notify FIRB if a transaction is caught by thresholds under the foreign investment rules. A foreign person who takes a notifiable action without having first notified FIRB or takes a "significant action" prior to obtaining the Treasurer’s approval can be subject to the following.

Criminal penalties

For individuals, up to ten years' imprisonment or a fine of up to 15,000 penalty units (AUD3.3 million). For corporations, up to 150,000 penalty units (AUD33 million).

Civil penalties

The lesser of:

• 2,500,000 penalty units (AUD555 million); or
• the greater of the following: 5,000 penalty units (AUD1.1 million) for individuals or 50,000 penalty units (AUD11.1 million) if the person is a corporation; or an amount determined by reference to the value for the action.

Section 50 of the CCA applies to all direct and indirect acquisitions within Australia of shares and/or assets, including:

• purchases of legal or equitable interests in assets, membership interests, and trust units;
• acquisitions by way of purchase, exchange, lease, hire or hire purchase; and
• joint acquisitions.

The ACCC Merger Guidelines state that section 50 does not apply to asset acquisitions by way of a charge or in the ordinary course of business. A mere internal restructuring will not give rise to a need to file if the acquisitions of shares are all between related bodies corporate as there would be no lessening of competition.

There is no statutory threshold based on “control”. However, any acquisition of shares and/or assets that raises competition concerns may be investigated by the ACCC.

In practice, the ACCC is most interested in acquisitions that result in a change in control. The ACCC’s Merger Guidelines indicate that the ACCC treats the acquisition of a controlling interest in a company in the same way as the acquisition of all the company’s shares. In most cases, a majority shareholding would deliver control of a company, but minority shareholdings with or without other interests may also be sufficient. Relevant factors include the ownership distribution of the remaining shares and distribution of voting rights.

There are no jurisdictional thresholds for the ACCC reviewing a transaction and it is not mandatory to notify, but the ACCC encourages parties to notify transactions that meet its guidance thresholds (see 2.1 Notification).

Under section 50, the ACCC must find that there is a substantial lessening of competition in a market in Australia, which may include a global market that includes Australia.

Under section 50A, the CCA applies to foreign-to-foreign acquisitions of a controlling interest in a body corporate where that body corporate has a controlling interest in a corporation. If the transaction would not otherwise fall within section 50, the ACCC may approach the Australian Competition Tribunal to declare that the transaction has the effect or is likely to have the effect of substantially lessening competition in a market. To date, section 50A has not been invoked by the ACCC.

There are no jurisdictional thresholds because it is not mandatory to notify the ACCC. However, the ACCC encourages notification where a potential transaction meets certain thresholds, which is based on the merger parties’ combined shares in the relevant market(s) (see 2.9 Market Share Jurisdictional Threshold).

Generally, the ACCC considers shares based on the merger parties’ revenues and/or sales volumes in at least three recent years, but it can also consider other measures of shares as appropriate.

When assessing whether a transaction falls within the ACCC’s guidance thresholds, both the acquirer’s and the target’s shares (including any shares of their related bodies corporate) should be included in the share calculation.

A related body corporate is defined in section 50 of the Corporations Act 2001 (Cth) to mean that where a body corporate is a holding company of another body corporate, a subsidiary of another body corporate, or a subsidiary of a holding company of another body corporate, the first-mentioned body and the other body are related to each other.

The ACCC requires information regarding the parties and their related bodies corporate to undertake the informal merger review and merger authorisation processes. To the extent there are any changes to the acquirer’s or the target’s businesses that may impact on share calculations after the ACCC has been notified of the transaction, it would be prudent to update the ACCC with this information.

As explained in 2.5 Jurisdictional Thresholds, the merger control regime under the CCA applies to foreign-to-foreign acquisitions where the parties’ activities include Australia, such that there could be an anticompetitive effect in Australia (eg, if there are Australian customers or businesses that could be affected).

As explained in 2.1 Notification, while it is not mandatory to notify the ACCC, the ACCC expects to be notified of a merger where:

• the products of the merger parties are either substitutes or complements; and
• the merged firm will have a post-merger market share of more than 20% in the relevant market(s). Consequently, it is possible for transactions that do not include any overlaps (ie, parties do not supply substitutable products) to be captured (eg, because the parties supply complementary products and one party has 20% or more share in their product).

Section 50 of the CCA applies to joint ventures if they involve the acquisition of shares and/or assets (see 2.3 Types of Transactions).

Joint ventures may also be subject to other provisions of the CCA that relate to restrictive trade practices, such as the provisions regulating cartel conduct (which can attract civil and criminal penalties) or contracts, arrangements or understandings that have the purpose or likely effect of substantially lessening competition (which can attract civil penalties). Exemptions to these provisions may apply if a joint venture meets certain criteria. Alternatively, parties may apply to the ACCC for authorisation of a joint venture for statutory immunity against breaching these provisions. 

The ACCC can investigate any transaction involving the acquisition of shares and/or assets. It may do so by:

• requesting information or documents to be provided on a voluntary basis; and/or
• exercising powers under section 155 of the CCA to obtain information, documents and evidence on a mandatory basis (see 3.10 Requests for Information During the Review Process).

The ACCC can also apply to the FCA for an injunction preventing completion of the transaction or a remedy more broadly (see 1.3 Enforcement Authorities).

As notification is voluntary, transactions are not required to be suspended until ACCC clearance is granted. However, the ACCC may in some circumstances ask parties to provide an undertaking not to complete a transaction until the ACCC has finished its review (eg, in circumstances where the transaction is not conditional on ACCC clearance and the ACCC has preliminary concerns). In addition, the ACCC may apply to the FCA for an interim injunction to prevent completion.

However, if FIRB approval is required, then the merger parties cannot complete until FIRB approval is obtained, which means that the ACCC clearance process is pseudo-suspensory (see 2.1 Notification).

Further, merger parties seeking merger authorisation must give an undertaking under section 87B of the CCA not to complete the transaction while the ACCC is considering the authorisation application.

There are no statutory penalties for completing a transaction without ACCC clearance. However:

• If the parties have given the ACCC a court-enforceable undertaking not to complete the transaction until the ACCC has completed its review, then completion may result in a court order directing compliance, penalties amounting to the financial benefit that can be reasonably attributed to the breach, or compensation.
• The ACCC can also apply to the FCA for an injunction to prevent completion of the transaction.

The ACCC may apply to the FCA for a range of remedies post-completion if it considers that the transaction contravenes section 50, including penalties and orders to unwind the transaction (see 1.3 Enforcement Authorities).

There are also civil and criminal penalties for implementing a transaction without FIRB approval if a transaction is caught by the foreign investment rules (see 2.2 Failure to Notify).

As noted in 2.12 Requirement for Clearance Before Implementation, the ACCC has no power to suspend completion of a transaction.

However, if parties have given an undertaking not to complete until the ACCC has completed its review, then the parties will need to seek ACCC consent to withdraw or vary the undertaking. 

In limited circumstances, it may be possible for the parties to negotiate with the ACCC to allow completion to occur subject to a hold separate undertaking, while the ACCC completes its review.

As the Australian merger control regime is non-suspensory (see 2.12 Requirement for Clearance Before Implementation), merger parties are not prohibited from completing a transaction before it is cleared by the ACCC. However:

• As explained in 2.14 Exceptions to Suspensive Effect, if parties have given a court enforceable undertaking not to complete until the ACCC has completed its review, then it must seek permission from the ACCC to vary the undertaking before the transaction can complete before clearance or authorisation.
• Though rare, there is a risk that the ACCC would apply to the FCA to seek an injunction to prevent completion (see section 1.3 Enforcement Authorities). In 2021 the ACCC successfully obtained its first interlocutory injunction from the FCA, preventing completion of the acquisition of Adora Fertility by Virtus Health pending a final determination on the merits, in circumstances where the ACCC review was ongoing.

If the parties have yet to receive ACCC clearance or authorisation, but wish to close the transaction, it may be possible for the parties to negotiate with the ACCC to allow completion to occur subject to a hold separate undertaking, while the ACCC completes its review. For example, while the ACCC reviewed its acquisition of Atwood Investment Holdings, Dometic Group provided an undertaking to hold a subsidiary of the target company separate until the ACCC completed its review in 2015 so that the rest of the global transaction could close in the interim.

There is no prohibition against completion before the ACCC completes its review unless the parties have given an undertaking not to complete the transaction until that time. In the merger authorisation context, the acquirer must give an undertaking to not complete the proposed acquisition while it is under review.

If the parties complete, merger authorisation is no longer an option as the ACCC cannot authorise completed acquisitions.

As notification is voluntary, there is no deadline or applicable penalties.

However, if parties have a condition precedent requiring ACCC clearance and a global timetable for completion, they should be mindful of filing early enough to provide the ACCC sufficient time to review. In May 2022, ACCC Chair Gina Cass-Gottlieb commented that merger parties often notify the ACCC later than other jurisdictions due to the absence of a mandatory notification requirement in Australia, which may slow down the global merger clearance process given the need to independently review the transaction.

There is no requirement in the informal clearance process to seek clearance on the basis of a binding agreement. Indeed, in some cases, bidders in an auction process will be required to obtain clearance before the seller will accept an offer. However, the ACCC will not consider a hypothetical transaction.

There are no filing fees under the informal merger clearance process.

A merger authorisation application requires a AUD25,000 filing fee. There is also a AUD25,000 fee for lodging an application for revocation and substitution of a merger authorisation. However, no fee applies for applications for minor variation or applications to revoke an existing authorisation.

As primary liability for a breach of section 50 falls on the acquirer, the acquirer is typically responsible for filing in Australia. However, the seller will bear ancillary liability so will be closely involved in the process.

However, in the course of assessing a transaction, the ACCC can seek information from any party. In particular, the ACCC may seek information or exercise statutory powers to compel the production of information or documents, or to give evidence (see 2.11 Power of Authorities to Investigate a Transaction).

Information Required for Informal Clearance Filing

There is no form for filing through the informal clearance process. However, the ACCC Informal Review Guidelines indicate that the ACCC requires initial information including:

• information about the parties, including their Australian business operations, interests and assets;
• details of the transaction; and
• information regarding market shares, imports, and new entry and expansion in relevant markets.

For mergers which the ACCC considers require a public review, the ACCC will typically ask for a list of key customers and/or supplier contact details.

Information Required for Merger Authorisation Application

To apply for merger authorisation, parties need to provide the ACCC with:

• a public version of their application;
• a signed declaration that the information in the application is true, correct and complete;
• a section 87B undertaking not to complete the transaction while the ACCC is considering the application; and
• the AUD25,000 lodgement fee.

The merger authorisation application requires information including:

• information about the parties;
• details of the transaction;
• transaction documents, including the sale and purchase agreement;
• documents relating to the applicant’s decision to acquire the target firm;
• information on the relevant markets;
• the effect of the transaction on competition; and
• public benefits and detriments likely to result from the transaction.

Invalid Notification Under the Informal Clearance Process

There are no penalties for an invalid notification under the informal clearance process. However, failure to provide relevant information upfront could cause delays to the clearance process, and if material facts later come to light that would have been relevant to the ACCC’s review, it may decide to reopen the investigation.

Invalid Notification Under the Merger Authorisation Process

The ACCC must assess the validity of a merger authorisation application within five business days of receipt.

If it considers that an application is invalid, no penalties apply. However, the ACCC will notify the applicant within the five-business day period and, in most cases, will provide the applicant with an opportunity to rectify and re-submit the application (with no additional fee, provided the AUD25,000 lodgement fee was paid initially).

If the ACCC becomes aware that the merger authorisation application was invalid after the initial five-business day period, it will raise this with the applicant.

Knowingly giving false or misleading information to the ACCC is a serious criminal offence under section 137 of the Criminal Code(Cth).

In the context of a merger authorisation application, it is an offence under section 92 of the CCA for a person to give information to the ACCC in connection with a merger authorisation application if the person knows, or is reckless or otherwise negligent, as to whether the information given is false or misleading. Pecuniary penalties apply for breaches of section 92.

Penalties also apply for refusal or failure to comply with a section 155 notice (such as giving evidence which is false or misleading) in the course of the ACCC carrying out its assessment of the transaction.

The ACCC’s clearance letter will state that it does not intend to take further action in relation to the transaction. The letter will contain a standard form caveat that if the ACCC becomes aware of new information or that information it received during the review process is incorrect or incomplete, it may reconsider its decision.

Informal Clearance Timeline

The informal clearance process may involve the following processes:

• Pre-assessment – when parties notify the ACCC of a transaction (or the ACCC otherwise becomes aware of it, eg, through FIRB consultation), the ACCC conducts a “pre-assessment” of the transaction. This is done confidentially and relying on information provided by the parties or otherwise publicly available, rather than conducting public market inquiries. In some cases, if the transaction is not confidential, the ACCC may conduct targeted inquiries (eg, with a selected number of customers and/or suppliers, without publishing the matter more broadly on its website). At the end of the pre-assessment process, the ACCC may decide to clear the transaction or go to public review (or a confidential review, if the transaction is not yet announced). The ACCC’s Informal Merger Guidelines indicate that it typically takes two weeks for pre-assessment. However, in practice, a substantive pre-assessment may take around six to eight weeks.
• Public review – if the matter goes to public review, the ACCC will publish a market inquiries letter on its website and seek submissions from interested parties. The letter will contain a brief description of the transaction and a set of questions for submissions to address. The ACCC will also publish an indicative timeline, which will include a "provisional decision date" for the end of its first phase of review. The ACCC’s indicative timing for public review is six to 12 weeks from concluding the pre-assessment phase. On the provisional decision date, the ACCC may decide to either clear the transaction or publish a "Statement of Issues" (ie, move to a second phase review).
• Statement of Issues (SOI) – if the ACCC has preliminary competition concerns following market feedback and this has not been resolved during phase one, it will publish an SOI, which sets out the issues that the ACCC are "likely" to be of concern (“red lights”) and issues that "may" be of concern (“amber lights”). The ACCC will also establish a secondary timeline. Parties may need to address the matters raised in the SOI with additional submissions and information. The ACCC’s indicative timing for this stage is six to 12 weeksafter publication of the SOI.

The duration of the above stages of informal merger clearance varies from case to case, depending on the complexity of the issues and/or the degree of complaints received from market participants. The ACCC may also suspend its published timeline (ie, "stop the clock") if parties do not meet the ACCC’s timeframes for responding to voluntary or statutory information/document requests. The ACCC may also "stop the clock" if parties offer a remedy during the review process and the ACCC requires additional time to consider the proposal, including to test the proposal with relevant market participants.

The overall time period for a highly complex merger is typically in the vicinity of six to eight months (accounting for clock stoppages).

Merger Authorisation Timeline

Under the merger authorisation process, the ACCC is subject to statutory timeframes. The timing certainty afforded by the merger authorisation process is considered to be one of the benefits of the process over informal clearance.

The ACCC has 90 calendar days to make a decision regarding a merger authorisation, starting from the day the ACCC receives a valid application.

If the ACCC does not make a decision within this time, it is deemed to have refused the application. However, the 90-day time limit can be extended with the consent of the merger parties in writing prior to the expiration of the 90 days. The ACCC has extended the timeline in each of the three merger authorisation reviews it has completed since 2017 to the date of this publication, with the longest being 171 days for the proposed amalgamation of BPAY, eftpos and NPPA.

There is the theoretical risk that the ACCC can repeatedly extend its review time and applicants will be left with no choice but to agree to those extensions or else risk a negative decision.

Further, in the context of other authorisation process (ie, authorisation of contracts, arrangements or understandings that may be cartel conduct or may have the purpose, effect or likely effect of substantially lessening competition), the ACCC has generally been diligent in complying with statutory timeframes. Practically, merger authorisation gives the parties more certainty as to timing and potentially a shorter timeframe, compared with informal merger clearance processes, which may involve protracted timeframes for complex transactions. On average in the last three years, informal merger clearance took around 105 calendar days.

Parties can engage in pre-notification discussions with the ACCC before initiating the informal clearance or merger authorisation processes.

Discussion With the ACCC Before Initiating an Informal Clearance Process

Parties may wish to approach the ACCC for a briefing and/or discussions prior to initiating the informal clearance process. Whether this is appropriate will vary from case to case (eg, if the transaction is significant and/or concerns a sector the ACCC is unlikely to be familiar with, it may be helpful to arrange a "briefing in" session). However, the ACCC is unlikely to give any indication of whether the transaction raises any concerns prior to reviewing the filing, although the ACCC may ask questions and give the parties a better indication of the type of information that the ACCC would consider helpful in its assessment. For more straightforward cases, there is unlikely to be any utility in seeking pre-notification discussions with the ACCC.

Discussion With the ACCC Before a Merger Authorisation Application

The ACCC strongly encourages potential merger authorisation applicants to contact the ACCC for an informal discussion before lodging their application. During such discussions:

• the applicant will have the opportunity to discuss their application and ensure that it is valid and contains adequate information; and
• the ACCC can indicate the issues that the applicant should address in their application, though the ACCC cannot provide its views on the likely outcome.

The ACCC also recommends that the applicant provide a draft application to the ACCC prior to the discussion, which will be kept confidential and will not be placed on the public register.

Types of Information Requests

For both the informal clearance and merger authorisation processes, the ACCC may:

• issue voluntary information and/or document requests to the merger parties or third parties before or during its review; and/or
• use its statutory information-gathering powers under section 155 of the CCA (section 155 notice) to compel the furnishing of information, production of documents and/or summon officers to provide oral evidence.

The nature of the voluntary requests and/or section 155 notices depends on many factors, including the extent of overlaps, whether an affected market or sector is one that the ACCC is focused on, and whether the ACCC is aware of complaints from market participants about the transaction.

For section 155 notices, the ACCC may provide a draft notice for the parties to comment on prior to serving the notice.

In June 2022, the ACCC announced that if documents are withheld from a response to a section 155(1)(b) notice on the basis of legal professional privilege, reasons must be provided for each privilege claim. This aligns the section 155 notice process more closely with the subpoena process and the approach taken by other corporate regulators in Australia such as the Australian Securities and Investments Commission.

Impact on Review Timeframe

For both the informal clearance and merger authorisation processes, the clock generally does not stop if the parties respond within the requested timeframes. However, if the parties delay in providing information, the ACCC may delay its review timeline.

A merger authorisation process may also be delayed if the ACCC needs to obtain or review extensive material (eg, a large volume of documents). As noted in 3.8 Review Process, the ACCC needs the parties’ consent to extend the timeline.

Under the ACCC’s informal clearance process, it is possible for parties to obtain clearance under the pre-assessment phase. This is usually possible for transactions that are not complex and/or where there are clearly no substantial competition concerns (eg, because there are very minimal overlaps). The ACCC’s guidance indicates that pre-assessment could take around two weeks (although in practice, a substantive pre-assessment may take six to eight weeks).

To avoid delays in the informal clearance or merger authorisation processes, parties should engage proactively with the ACCC on competition issues (especially if they are raised by overseas regulators), as this can reduce or prevent information requests, and respond to information requests on time.

The substantive test under section 50 of the CCA is whether the transaction would have the effect or likely effect of substantially lessening competition.

Section 50(3) contains a non-exhaustive list of “merger factors” that the courts have to take into account (and which the ACCC will also take into account) when reviewing a transaction. The courts and the ACCC may also consider any other relevant factors.

• Import competition: the degree of actual or potential direct competition from imported goods or services, including whether the supply of imports can respond to competitive signals in a timely and sufficient manner.
• Barriers to entry: the likelihood of timely and sufficient entry and expansion in relevant markets post-transaction. The ACCC will more likely have competition concerns where significant barriers exist. However, a transaction need not increase barriers to entry for it to be considered anti-competitive by the ACCC.
• Concentration and market shares: the extent to which the transaction will increase market concentration, including through considering the market shares of the merging parties and their competitors, and whether current market shares are likely to reflect future market share patterns.
• Countervailing power: the degree to which customers have countervailing power, which can weigh against the merged entity’s market power. Countervailing power exists when buyers have special characteristics that enable them to credibly threaten to bypass the merged firm (eg, through vertical integration and/or sponsoring new entry).
• Ability to increase prices for profit margins:the extent to which the transaction will give the merged entity a greater ability to significantly and sustainably increase prices or profit margins, as this may also indicate that the transaction is likely to give rise to a substantial lessening of competition or result in public detriments that outweigh public benefits. However, the ACCC recognises that increased profitability is not in itself a conclusive indicator of a substantial lessening of competition.
• Substitutes: whether substitutes are available and the degree to which they impose sufficient constraint on the merged entity, having regard to how close the merger parties compete with each other and other market participants, and the ability of rivals to expand. This assessment is related to identifying the relevant product market(s) (see 4.2 Markets Affected by a Transaction).
• Dynamic characteristics of the market: the degree and extent of any change to the nature of the market in the future. Dynamic changes may result from a range of factors including market growth, innovation, product differentiation and technological changes.
• Removal of a vigorous and effective competitor: vigorous and effective competitors can drive significant aspects of competition, such as pricing, innovation or product development, even though their own market share may be modest. Therefore, if a transaction involves acquiring a vigorous and effective competitor or a ‘maverick’, the ACCC will be more likely to consider that the transaction raises competition concerns.
• Vertical integration: if a merger involves both horizontal and vertical competition issues (for example, because one or more of the merger parties operate at more than one level of the supply chain or each of them operates at a different level), the ACCC will assess the merger based on the combined potential horizontal and vertical impacts on competition.

Section 50(6) of the CCA defines “market” as a market for goods or services in Australia, a State or Territory of Australia, or a region of Australia.

The ACCC defines markets based on the products and geographic areas that are supplied, or potentially supplied, by the merger parties. It typically focuses on the overlaps between the merger parties in the products and areas supplied, and on their close substitutes.

In relation to substitution, the ACCC is concerned with:

• demand-side substitution, which involves consideration of the likely customer switching behaviour in response to an increase in price, or a decrease in service or quality; and
• supply-side substitution, which involves consideration of behaviour in response.

The ACCC may request and take into account the following information to identify a close product substitute:

• the function, end use, and characteristics of the product;
• cost of switching, and evidence of switching; and
• changes in the product price compared to that of potential substitutes.

In identifying close substitutes of the relevant geographic area, the ACCC may consider:

• the portability of the product (which may depend on its perishability or weight);
• transportation costs;
• the ease, cost or difficulties associated with obtaining the product from alternative regions; and

• changes in price between different geographic sources of supply.

While the ACCC in practice will have regard to Australian and overseas case law and/or its previous decisions or decisions by other regulators, it is not bound by them.

However, if the ACCC brings court proceedings, then the court will have regard to, and be bound (as appropriate) by Australian case law.

As discussed in 4.1 Substantive Test, the ACCC will have regard to the merger factors set out in section 50(3) of the CCA, in addition to other factors it considers relevant to the assessment of whether a transaction will have the effect or likely effect of substantially lessening competition.

The potential theories of harm to competition that the ACCC will assess are set out in the ACCC’s Merger Review Guidelines.

Unilateral Effects

The ACCC will consider whether the transaction will give rise to or increase the likelihood of unilateral effects, which is when competitive constraints are weakened or removed such that the merged firm’s unilateral market power increases post-merger. A merged firm’s unilateral market power may increase if it has the ability and incentive to raise prices, reduce output or otherwise exercise market power it has gained.

Coordinated Effects

The ACCC will also consider whether a transaction will give rise to or increase the likelihood of co-ordinated effects when they assist firms in the market to coordinate their pricing, output or related commercial decisions.

This may occur if a merger:

• reduces the number of firms among which to coordinate;
• removes or weakens competitive constraints; or
• alters the market conditions that make co-ordination more likely.

Vertical Effects

The ACCC will consider the effect on competition of a merger between firms at different levels of a vertical supply chain where the upstream firm supplies an input to the downstream firm’s production process. It will consider whether the vertically integrated merged firm would have the ability and incentive to foreclose rivals, for example by:

• charging downstream rivals higher prices for an important input;
• limiting or denying downstream rivals from accessing an important input;
• limiting or denying upstream rivals from accessing customers; and/or
• charging upstream rivals higher prices for accessing customers.

Conglomerate or Portfolio Effects

The ACCC will consider whether conglomerate mergers between firms that interact across related product markets will enable the merged firm to foreclose rivals and reduce competition by bundling or tying products across a portfolio. Typically, a conglomerate firm would be able to do if it has sufficient market power in at least one functional level of the vertical supply chain, or in one of the related markets.

Informal Merger Clearance

In the informal merger clearance process, the ACCC does not consider economic efficiencies as part of the substantive test under section 50 of the CCA of whether the transaction would have the effect or likely effect of substantially lessening competition, unless the parties are able to demonstrate the efficiency gain is likely to have an impact on competition by being passed on to consumers in terms of lower pricing, for example.

Merger Authorisation

However, one of the advantages of the merger authorisation process is that the ACCC can grant authorisation if it is satisfied that the transaction:

• would not be likely to have the effect of substantially lessening competition; or
• is likely to result in a net public benefit (ie, the likely public benefit resulting from the transaction outweighs the likely resulting public detriment).

Accordingly, the ACCC may consider economic efficiencies in the course of the merger authorisation process. Merger parties may wish to consider merger authorisation (rather than informal merger clearance) in circumstances where the transaction may be perceived to raise competition issues but would also give rise to material public benefit.

Court Action

Economic efficiencies are not relevant if the ACCC brings court action in relation to a transaction that it considers has contravened section 50 of the CCA.

The ACCC does not consider non-competition issues as part of the informal merger clearance process.

However, in the merger authorisation process the ACCC will assess whether the transaction is likely to result in a net public benefit, which can include consideration of non-competition public benefits.

The ACCC considers joint ventures caught by section 50 the same way that it does other acquisitions.

The ACCC’s Merger Guidelines note that joint acquisitions of assets by rivals may have coordinated effects (see 4.4 Competition Concerns). For example, two competitors in a market may participate in a joint venture in another market, which may result in coordinated effects in the first market.

The ACCC does not itself have independent powers to suspend or prevent parties from completing a transaction. However, as explained in 1.3 Enforcement Authorities, if the ACCC has serious competition concerns with a transaction, and the parties choose to proceed with the transaction without ACCC approval (or notwithstanding ACCC issuing an oppose decision), the ACCC may apply to the FCA for remedies, which include seeking an injunction to prevent completion and/or or an order to divest or unwind following completion.

As explained in 2.1 Notification, if the transaction requires FIRB approval, notification to the ACCC is pseudo-mandatory and suspensory, because FIRB consults with the ACCC regarding any competition concerns and will not approve the proposed foreign investment until it has received confirmation there are no such concerns from the ACCC.

Section 87B Undertakings

The ACCC has the power to accept court enforceable undertakings under section 87B of the CCA as a means of remedying competition concerns that may arise from mergers. While it is possible to offer both behavioural and structural undertakings (or a combination of both), the ACCC has expressed that it considers behavioural undertakings are unlikely to sufficiently remedy any competition concerns it may have with a transaction (see 5.4 Typical Remedies).

Commitments to the FCA

Outside of the ACCC process, it is also possible for parties to offer commitments directly to the FCA during court proceedings; if such undertakings are accepted by the FCA, the ACCC may also accept an 87B undertaking to assist in the monitoring and enforcement of the undertakings accepted by the FCA.

Parties may offer any remedies, and there is no legal standard that remedies must be met. However, the ACCC has discretion over whether to accept a remedy. Its Merger Review Guidelines indicate it has a strong preference for structural undertakings (ie, divestitures) over behavioural undertakings, as it considers structural remedies tend to be more straightforward to administer, monitor and enforce.

Further, the ACCC typically prefers remedies to be offered in its standard section 87B undertaking form, which is provided in its Section 87B Undertakings Guidelines.

As the ACCC prefers structural undertakings over behavioural undertakings, it accepts the former more frequently. Between 2021 and May 2022, the ACCC:

• conducted informal clearance reviews of 31 mergers and accepted undertakings in only two, Culligan/Waterlogic and Veolia/Suez, both of which were structural; and
• completed merger authorisation reviews of three transactions and accepted undertakings in two, AP Eagers/Automotive Holdings and the amalgamation of National Payments Platform Australia, BPAY and eftpos, the latter of which was behavioural.

Structural Undertakings

The ACCC Merger Guidelines indicate that generally, a structural undertaking requires all of the following in order to be acceptable to the ACCC:

• a divestiture remedy that is proportionate to the competition concerns and effective in restoring or maintain competition;
• sale of the assets to a viable, effective and long-term competitor;
• procedures for the purchaser to be approved by the ACCC;
• preservation of the value and integrity of the divestiture package, pending divestiture;
• appropriate provisions which would apply if the firms fail in their core obligations;
• appropriate provisions to enable ACCC monitoring, investigation and enforcement (if necessary) to ensure compliance with the undertakings; and
• implementation within a timely manner.

Behavioural Undertakings

The ACCC Merger Guidelines indicate that behavioural undertakings are generally only appropriate if they foster the development or maintenance of effective competitive constraints in the short-term. Permanent or long-term behavioural undertakings are rare.

Recent behavioural remedies accepted by the ACCC include:

• The 2021 behavioural undertaking from Australian Payments Plus in connection with its acquisition of shares in BPAY, eftpos and New Payments Platform Australia. The undertaking includes obligations on Australian Payments Plus to ensure the parties will supply prescribed services, explore and make available certain services, and to agree an industry-wide standard.
• The 2019 undertaking relating to ANZ Terminals’ acquisition of GrainCorp Liquid Terminals Australia, which had both structural and behavioural elements. This undertaking required the parties to divest a terminal and ANZ Terminals to not lease further land in a specified area without ACCC consent.
• The 2018 undertakings relating to the acquisition of the majority interest in the WestConnex project by Sydney Transport Partners (a consortium led by Transurban). This undertaking includes obligations on Transurban require Transurban to publish important traffic data to ensure that the transaction would not lessen competition for future toll roads.

The ACCC also recently rejected the long-term behavioural undertaking offered by Google in relation to its proposed acquisition of Fitbit (which it completed in 2021 without ACCC approval). Under the undertaking, Google offered to behave in certain ways towards rival wearable manufacturers, not use health data for advertising and, in some circumstances, and allow competing businesses access to health and fitness data. Though the European Commission accepted a similar undertaking from Google, the ACCC was not satisfied that such a long-term behavioural undertaking could be effectively monitored and enforced in Australia.

In 2020, the ACCC considered a behavioural undertaking offered by Woolworths in relation to its acquisition of a 65% shareholding of PFD Food Services. Though the ACCC received feedback from public consultations that the undertaking would not be effective, it ultimately considered that it was unnecessary as the acquisition was unlikely to substantially lessen competition.

When to Offer a Section 87B Undertaking

Merger parties can propose an 87B undertaking at any stage of the informal clearance or formal merger authorisation processes.

Although undertakings may be offered upfront, they are more frequently offered after the ACCC has expressed its preliminary concerns to address those concerns. The ACCC will usually conduct public consultation with interested parties on the effectiveness of proposed section 87B undertakings, which may delay its review.

How to Offer a Section 87B Undertaking

The merger party (usually the acquirer) must offer an 87B undertaking based on the ACCC’s standard form. The ACCC does not accept changes to the majority of the operational provisions and any amendments must be explained in a submission.

After receiving the offer, the ACCC typically conducts public market inquiries (which can be targeted) with interested parties to test whether the proposed remedy is adequate to address competition concerns raised by the potential transaction, and the level of composition, purchaser and asset deterioration risk associated with the proposed divestiture package. The ACCC will then raise the market feedback with the merger parties and may suggest amendments to the proposed 87B Undertaking to address any issues. The ACCC typically allows for two to three weeks to conduct these inquiries.

Generally, the ACCC prefers upfront buyers. However, if there is no upfront buyer, the merger parties will generally need to persuade the ACCC that there will likely be sufficient parties interested in purchasing the divested business, and that asset deterioration is unlikely.

In May 2022, the ACCC accepted a divestment remedy without an upfront buyer from Culligan’s parent company (Osmosis), in relation its acquisition of Waterlogic. The undertaking requires Osmosis to propose a purchaser for approval by the ACCC.

Informal Clearance Decisions

If a transaction is cleared and does not raise significant issues, the ACCC will publish a brief outline of its decision on the ACCC website. This will typically involve a short summary of its reasons and a media release.

The ACCC will publish a public competition assessment (PCA) that outlines the basis for reaching its final conclusion if:

• a merger is cleared and raises important issues that the ACCC considers should be made public;
• a merger is rejected;
• a merger is subject to enforceable undertakings; or
• the merger parties seek such disclosure.

The ACCC aims to publish PCAs within 30 business days of making a decision, but this may be longer in complex matters. It will also provide a letter to the parties stating it does not intend to take further action regarding the transaction.

Merger Authorisation Decisions

The ACCC may grant merger authorisation without conditions, grant authorisation subject to conditions (usually this will take the form of a condition to give and comply with a section 87B undertaking), or deny authorisation.

The ACCC must provide its decision and reasons to the applicant in writing. It will also publish the decision on its public register.

As explained in 1.3 Enforcement Authorities, the ACCC does not have power to require a remedy or prohibit a transaction, but may clear a transaction if the parties offer a remedy that addresses the ACCC’s concerns.

However, between 2018 and May 2022 the ACCC completed informal merger review of 87 transactions, taking the following actions.

• It accepted section 87B undertakings to resolve competition concerns it had with 14 transactions.
• It opposed three transactions. B&J City Kitchen/Jewel Fine Foods was withdrawn, but the remaining two were ultimately completed and led to court proceedings. After the ACCC opposed the TPG/Vodafone acquisition, the parties challenged its decision in the FCA, which declared that the transaction was not contrary to section 50 of the CCA. In Pacific National/Aurizon, the ACCC commenced enforcement proceedings against the parties alleging that they had reached an understanding that would contravene section 50. The Full Federal Court found in favour of the parties, and the ACCC was denied special leave to appeal the decision to the High Court in 2020.
• It did not take enforcement action against two transactions that were completed before the ACCC completed its review (Google/Fitbit and Qube/Newcastle), though it investigated both. Its investigation of Google/Fitbit is ongoing as of the date of this publication, but it announced in March 2022 that it would not pursue enforcement action against Qube.
• It successfully obtained an injunction from the FCA to restrain the Virtus/Adora transaction from completing, its first such injunction since 1994.

See 9.2 Recent Enforcement Record for further detail on the ACCC’s enforcement and investigation activities.

It is not uncommon for the ACCC to clear foreign-to-foreign transactions subject to remedies. For example, it recently cleared the acquisition of Waterlogic by Culligan, both of which are based overseas, subject to a structural undertaking.

The ACCC has not recently opposed any foreign-to-foreign mergers, but the Trade Practices Commission (which was merged with the Prices Surveillance authority to establish the ACCC in 1995) has done so in the past. For example, the Commission brought action against Gillette/Wilkinson Sword in 1992 and the FCA found that, notwithstanding that the transaction was entered into overseas, section 50 was applicable and there was evidence that it had been breached.

A clearance decision will cover related arrangements that are legitimately part of the transaction, as the ACCC will assess whether the acquisition, including the arrangements substantially lessens competition, compared to the world without the acquisition and arrangements.

Any arrangement which is not legitimately related to the transaction will not be covered by the ACCC’s review and the parties may need to seek separate authorisation if the arrangement would otherwise breach other CCA provisions, such as the prohibitions on cartel conduct or other contracts, arrangements and understandings that have the purpose, or likely to have the effect, of substantially lessening competition.

The ACCC may reach out to third parties such as customers and competitors of the merger parties as part of its assessment of a transaction in both the informal clearance and merger authorisation processes (see 7.2 Contacting Third Parties).

Any party may contact the ACCC to voice concerns about a transaction, including in response to a market inquiries letter or to make a complaint even if the transaction has not been notified. Third parties may make submissions and provide information and/or other supporting evidence.

For merger authorisations, third parties can make submissions to the ACCC, which are published on its register.

While the ACCC is the only entity able to obtain an injunction for a potential breach of section 50 of the CCA, other parties may seek other remedies, including declarations and damages, and the ACCC may request third parties to give evidence in any proceedings.

In the pre-assessment stage of an informal clearance process, the ACCC may conduct limited targeted inquiries if the transaction is not confidential. It will typically ask parties to provide contact details (eg, of a selection of customers) and the ACCC will reach out to them individually for telephone calls.

In the course of a public review in the informal clearance process (if the transaction is not pre-assessed), and in the merger authorisation process, the ACCC will typically undertake more rigorous inquiries of third parties by:

• conducting targeted inquiries by contacting customers and/or competitors; and/or
• conducting public market inquiries by publishing a market inquiries letter on its public register to ask interested parties to make submissions. The ACCC will also typically reach out directly to the merger parties’ key customers.

The ACCC may seek the views of third parties on not only the transaction but also to test any remedies offered by the merger parties.

Confidentiality Under the Informal Clearance Process

During the pre-assessment stage of the informal clearance process, the ACCC does not publish information regarding the transaction. However, if it decides to commence public review, it will place non-confidential information regarding the transaction on the public register. The ACCC provides merger parties with an opportunity to make confidentiality claims over information published on the register (such as the market inquiries letter).

The ACCC does not publish submissions it receives in the course of the informal clearance process. However, the ACCC will provide the merger parties with an anonymised summary of the feedback it receives during market inquiries.

Confidentiality Under the Merger Authorisation Process

The ACCC publishes merger authorisation applications on its public register. However, the merger parties can claim confidentiality over material in the application and provide the ACCC with a redacted version of the application for publication.

Confidentiality Generally

Under both the informal clearance and merger authorisation processes, the parties may claim confidentiality over information and documents provided to the ACCC. The ACCC considers requests for confidentiality on a case-by-case basis, and accepts confidentiality information on its usual terms (which relate to the ACCC’s use of the information and disclosure to external advisers, consultants and third parties) (see section 2.43 of the ACCC Informal Merger Guidelines and section 5.9 of the ACCC Merger Authorisation Guidelinesfor details).

The ACCC, being party to a number of co-operation agreements with international competition and consumer agencies and governments, co-operates closely with regulators in a number of jurisdictions. These include:

• the United Kingdom’s Competition and Markets Authority;
• the United States Federal Trade Commission and Department of Justice;
• the New Zealand Competition Commission;
• the European Commission;
• the Canadian Competition Bureau;
• the Ministry of Commerce of the People’s Republic of China;
• the Competition Commission of India; and
• the Fair Trade Commission of the Republic of Korea.

The ACCC may consult with other regulators regarding a transaction. Where discussions do not involve protected information (such as commercially sensitive or confidential information), the ACCC may do so without seeking permission from the merger parties.

However, where the ACCC wishes to share or seek confidential information, then it must seek confidentiality waivers from the parties (ie, permission to handle the information). The ACCC will typically ask parties to sign its standard form waiver for most transactions that are being considered by overseas competition regulators.

Appealing Informal Clearance Decisions

There is no right of appeal the ACCC’s decision not to grant informal clearance. However, merger authorisation may be sought at any time during the informal clearance process or after the ACCC announces its decision to oppose the transaction.

Further, if the parties object to the ACCC’s opposition to the transaction, they can seek a declaration from the FCA that the transaction does not breach section 50. For example, after the ACCC opposed the merger of TPG Telecommunication and Vodafone Hutchison Australia, the FCA declared in 2020 that the merger would not substantially lessen competition.

Prior to the 2017 reforms to Australia’s competition laws following the 2015 Competition Policy Review (the Harper Reforms), merger parties could seek authorisation from the Australian Competition Tribunal if the ACCC did not clear the transaction (or if the parties believed that the ACCC was likely not to clear the transaction). For example, in 2016 the Australian Competition Tribunal granted Sea Swift authorisation to acquire asserts of Toll Marine Logistics (subject to conditions) despite the ACCC’s opposition to the transaction.

For informal review, even if the ACCC decides to oppose a transaction, the parties are not prohibited from completing the transaction. However, such a decision is a strong signal that the ACCC will initiate court action to prevent completion.

Appealing Merger Authorisation Decisions

Merger authorisation decisions of the ACCC are subject to review by the Australian Competition Tribunal under a process that is also governed by strict timelines (90 days to make its decision, extended to 120 days if new information is admitted).

The Tribunal will make its decision based upon the materials that were before the ACCC, but it has the discretion to allow or request further evidence that was not available at the time of the ACCC’s decision or to address new circumstances.

As mentioned in 8.1 Access to Appeal and Judicial Review, the appeal of a merger authorisation decision is governed by a strict timeline of 90 days that may be extended to 120 days.

Since the Harper Reforms, no merger authorisation decisions have been appealed to date.

Third parties do not have a right to seek an injunction for a breach of section 50 but may seek other remedies, as noted above.

Third parties may apply to the Australian Competition Tribunal for a review of an ACCC merger authorisation decision. However, they must explain their interest in the decision.

Merger Authorisation

The ACCC’s power to grant merger authorisation was the result of the 2017 Harper Reforms. Merger authorisation was previously the responsibility of the Australian Competition Tribunal. Under the current laws, merger parties cannot seek authorisation in the Tribunal in the first instance, but they may seek a review by the Tribunal of an ACCC decision to refuse authorisation.

ACCC’s Merger Reform Proposals

In August 2021, the ACCC announced its economy-wide merger reform proposals, outlined below. It is also worth noting that the ACCC has raised the possibility of a creating merger control regime specific to digital platforms, which would have the elements similar to what is being proposed economy-wide (but applying only to the digital sector).

However, the ACCC’s proposals are preliminary and at a conceptual stage, and any such changes would require a change to legislation. As at the date of this publication, no draft legislation has been proposed. Further, the proposals were announced under the previous ACCC Chair and it remains to be seen whether or the extent to which these reforms will be progressed under the new Chair Ms Gina Cass-Gottlieb, who commenced in March 2022.

New merger review processes

The ACCC has called for a new merger review process to replace the existing voluntary regime and its options for clearance (including informal merger review and merger authorisation) with a mandatory and suspensory regime. Under the proposed system:

• all acquisitions above specified thresholds would be required to be notified the ACCC;
• completion of the notified acquisition would be prohibited until clearance is granted; and
• the ACCC would have a “call-in” power to formally review acquisitions that fall below the thresholds.

Changes to the substantive merger test

The ACCC has also proposed four main reforms to the merger test:

• Updating the merger factors to focus on structural conditions for competition that are changed by the acquisition to the detriment of competition, as well as the inclusion of new factors that address whether the acquisition may result in the loss of potential competitive rivalry and/or increase access to, or control of, data, technology and other significant assets.
• Defining the term “likely” in section 50 of the CCA to mean “a possibility that is not remote,” which would mean that establishing contravention of section 50 would not require a finding on the balance of probabilities that there is a real commercial likelihood of an SLC.
• Inclusion of a deeming provision that acquisitions involving substantial market power will substantially lessen competition. The deeming provision would apply where one merger party has substantial market power, and as a result of the acquisition, that position is likely to either be entrenched, materially increased or materially extended.
• Consideration of other agreements between merger parties as part of the SLC assessment to prevent parties from taking steps to change the counterfactual or take advantage of the anti-overlap provisions in section 45 of the CCA.

Recent ACCC Review Record

Although the ACCC conducted public reviews of 31 mergers between 2021 and May 2022, it did not oppose any and:

• four mergers were withdrawn: Virtus/Adora, Aon/Willis Tower Wilson, Cargotec/Konecranes, and OneFortyOne Plantations/World Timberfund Australia Trust;
• one merger was given "no decision" by the ACCC: after Google completed its acquisition of Fitbit without ACCC approval in January 2021, the ACCC closed its review without a decision and commenced an investigation into the transaction; and
• one merger was cleared subject to an undertaking (Culligan/Waterlogic).

Recent ACCC Enforcement and Investigative Action

Noting that there are no fines or penalties for failing to notify, the ACCC has historically had limited success in taking action in the courts in relation to mergers. As mentioned in 5.8 Prohibitions and Remedies for Foreign-to-Foreign Transactions, the ACCC was unsuccessful in the high-profile enforcement proceedings that it brought against the merger parties in Pacific National/Aurizon for alleged breaches of section 50 of the CCA.

The ACCC does not always commence enforcement action where parties complete a reviewed transaction without ACCC approval. For example, the ACCC has not announced any enforcement action against Google for completing the acquisition of Fitbit in January 2021 without ACCC approval. It also investigated Qube/Newcastle Agri Terminal after the parties completed the transaction before the ACCC had completed its review, but announced in March 2022 that it would not pursue enforcement action against Qube.

However, the ACCC has been able to use the informal clearance process to prevent mergers that it considers raises competition issues, either because the parties withdraw or provide remedies to address the concern (primarily via divestiture). Notably, in 2021, the ACCC successfully obtained an interlocutory injunction to restrain the Virtus/Adora merger.

As discussed in 2.1 Notification, the ACCC identifies competition concerns in its compliance and enforcement priorities and in its inquiries. In his speech on the ACCC’s 2022-2023 compliance and enforcement priorities, the then-Chair Rod Sims observed the high levels of merger and acquisition activity in Australia and expressed concerns around the adequacy of the current merger control regime in Australia (see 9.1 Recent Changes or Impending Legislation regarding the ACCC’s proposed reforms). The ACCC’s current priorities include competition and consumer issues arising in relation to:

• essential services (especially in energy and telecommunications);
• financial services, especially payment services;
• energy; and
• digital platforms.

The ACCC has expressed it is particularly focussed on acquisitions by large digital platforms with market power, in particular acquisitions that protect or extend the market power of large digital platforms, such as acquisitions that enable platforms to expand into related markets. The ACCC is exploring the impact of these acquisitions on competition in its ongoing DPSI.

In recent years, the ACCC has also shown particular interest in mergers in the health sector (for example, it obtained an interlocutory injunction in 2021 to prevent the acquisition of Adora Fertility by Virtus Health), financial services and in transactions in the digital and data space (such as MYOB/GreatSoft, Dye & Dun/Global X, Salesforce/Slack, and Google/Fitbit).