On 15 November 2024, the Senate Economics Legislation Committee (committee) published the report (Report) on its inquiry into the provisions of the Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024 (Bill).
As we reported here, the Bill (if passed) will move Australia’s merger review system to a mandatory and suspensory notification administrative regime, representing a significant departure from the longstanding voluntary informal clearance process with a judicial enforcement model. You can find a snapshot of the key changes and practical implications of the merger reforms here.
The committee ultimately recommended the Bill be passed and noted the views expressed by stakeholders that the sooner the Bill is passed by the parliament, the sooner formal consultation on the legislative instruments containing the monetary thresholds and targeted notifications can begin. The Coalition and the Greens also supported passage of the Bill.
Consequently, the Bill appears poised to be passed before the Senate rises on 28 November 2024, given the planned commencement of the new system formally on 1 January 2026, the transitional arrangements that are expected to occur from 1 July 2025 and the need for the legislation to be passed before the ACCC can commit the resources it needs to prepare for the new system.
What you need to know
The committee acknowledged the wide level of support for the Bill to create a mandatory, suspensory and administrative merger control system in Australia and indicated they were encouraged by the support from the business community who have said they will benefit from a greater level of certainty and confidence. The committee also:
Welcomed new requirement for merger parties meeting certain thresholds to notify the ACCC of their intention to merge and require approval from the ACCC before they can proceed, and giving the ACCC the ability 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.
Noted the government has given clear indications of the monetary thresholds and targeted notifications for mergers and acquisitions which will be set by delegated legislation. While it acknowledged some stakeholders had views about the monetary thresholds and targeted notifications, the Bill requires consultation and parliamentary scrutiny of these legislative instruments.
Reiterated views of stakeholders 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 ACCC Chair said the ACCC is well-primed and ready to consult if the Bill is passed this year.
The Coalition supported passage of the Bill, but emphasised the critical need for effective, responsive and transparent implementation. In particular, Senator Andrew Bragg and Senator Dean Smith put on record several matters of concern, which, if not thoroughly monitored and mitigated, will jeopardise the competition benefits the Bill seeks to achieve. The Coalition Senators also recommended:
Establishing an expert implementation advisory panel, which should include representation from the Competition Taskforce Advisory Panel and key submitters to this inquiry including the Business Council of Australia and the Technology Council of Australia.
Treasury and ACCC officials provide a private briefing to the Senate Economics Committee on merger regime implementation progress on a quarterly basis.
Giving serious consideration to the Business Council of Australia’s implementation proposals that have not yet been adopted, namely the quarterly publication of key performance indicators on merger timelines and the publication of s155 notices data.
The Greens also supported the Bill and recommend it be passed as soon as possible.
However, the Greens expressed deep concern the Labor Government is not prioritising reforms that would make markets more competitive, including by introducing economy-wide divestiture powers to break up corporations that abuse their market power. It recommended the government should prioritise reforms that would make markets more competitive and bring down the cost of essential goods and services, including by introducing economy-wide divestiture powers to allow for corporations that have misused their market power to be broken up.
What’s next
On 5 November 2024, the Bill was read a second time in the House of Representatives then referred to the Federation Chamber for a debate about the Bill. The Federation Chamber was due to debate the Bill last week but due to an overflowing agenda, the Bill debate was postponed until the Federation Chamber next reconvenes, from 18 November 2024 onwards.
Once the Federation Chamber reports back to the House of Representatives, the Bill is likely to be sent to the Senate for its consideration. We expect the government is aiming to make sure the Bill will be passed before the Senate rises on 28 November 2024, given the planned commencement of the new system formally on 1 January 2026, the transitional arrangements that are expected to occur from 1 July 2025, and the need for legislative instruments including delegations before the ACCC can commit the resources it needs to prepare for the new system, including preparation of the forms required for filing. If not, the parliament is proposed to return on 4 February 2025.
If the Bill is passed, the new system formally commences on 1 January 2026 and the ACCC has indicated it will allow parties to voluntarily notify acquisitions to the ACCC under the new system from 1 July 2025, before the mandatory notification requirements and other remaining aspects of the system commence on 1 January 2026.
As to the proposed notification thresholds, Treasury has indicated it will “consult on further detail on the notification thresholds through the development of subordinate legislation (in the form of legislative instruments) later in 2024–25”. At a public hearing on 30 October 2024, Jessica Robinson, Assistant Secretary at Treasury, confirmed that Treasury is in the process of developing drafting instruction for the proposed instruments relating to the threshold notification and designation requirements and is well placed, should the Bill pass, to have the instruments ready and out for consultation. She noted timing of consultation is at the discretion of the Treasurer and government.
The ACCC has also indicated it will publish analytical guidelines and process guidelines in early 2025 to provide clarity on how the ACCC proposes to assess mergers and the process for engaging with the ACCC.
We will continue to report on developments relating to the Bill and practical implications for business – watch this space.