On 20 March 2025, the ACCC published draft merger assessment guidelines for consultation, outlining the analytical framework the ACCC will apply when assessing notified acquisitions under the new regime. Submissions are due on 17 April 2025.
Once finalised, these guidelines will replace the ACCC’s current 2008 Merger Guidelines (last updated in 2018) and be applied by the ACCC when assessing mergers notified under the new clearance regime, which commence on a voluntary basis from 1 July 2025. As the ACCC will be the first instance administrative decisionmaker under this new regime, the guidelines will be important, particularly to the extent they reflect a shift from the ACCC’s previous approach to merger review.
These draft guidelines are the latest instalment in the suite of new guidance supporting the new merger regime. They come after the ACCC released some Frequently Asked Questions on 17 March and guidance on transitional arrangements to this new regime on 4 March, which we summarised here as part of our ongoing reporting of the new merger regime.
We still await draft ACCC guidance on the new process itself, as well as draft regulatory instruments setting thresholds, application forms and other practical matters.
Key shifts in the ACCC’s future approach to analysing mergers
Many aspects of these new draft guidelines reflect the way the ACCC currently analyses mergers, which has evolved since the 2008 guidelines were last updated. However, there are some changes in emphasis, particularly given the new merger laws, which shift the analytical focus and reflect international merger policy trends, as outlined below:
Creating, strengthening or entrenching market power: As we’ve previously discussed, the new merger laws will clarify that an SLC may result from the ‘creating, strengthening and entrenching’ (CSE) of substantial market power. Although this addition is intended to ‘elucidate’ the SLC test and not change it, the new draft guidelines consider that the words are intended to increase the focus on the merger parties’ market power, so a small change may be an SLC. Acquisitions of nascent competitors and startups, and roll-up strategies appear to be the focus of this emphasis.
Greater emphasis on economic analysis: The new draft guidelines place greater emphasis on economic analysis, including through more use of traditional economic tools to assess mergers, more detailed discussion on the different types of efficiencies and clarifying when efficiencies are relevant to the ACCC’s competition assessment of a merger (now known as "rivalry-enhancing efficiencies").
Other novel theories of harm and concepts: Notably, the ACCC has incorporated several novel concepts and theories of harm in competition law which are not considered in the current guidelines and are largely untested in Australian jurisprudence, including consideration of multi-sided platforms, network effects, integration into ecosystems and limiting access to data and interoperability.
Overall, the guidelines mostly reflect updates to current practice and themes, rather than a radical shift in approach by the ACCC.
We discuss these in further detail below.
Creating, strengthening or entrenching substantial market power
As previously discussed, the new merger law clarifies that a SLC can result from “creating, strengthening or entrenching substantial market power”. Consistent with the Explanatory Memorandum, the ACCC’s new draft guidelines state that the addition of the CSE element of the test should be seen as an "elucidation" of the ways which a SLC can arise, rather than change the meaning of a SLC. However, the ACCC states that [at 1.26]:
“… the words are intended to increase the focus on the market power of the merger parties and to clarify that even a small change in market power may amount to a substantial lessening of competition.” (emphasis added)
Notwithstanding the legislative intent not to change the SLC test, the new draft guidelines do appear to reflect a change of emphasis and suggest that the CSE element could apply to two types of acquisitions not discussed in the ACCC’s 2008 Merger Guidelines – mergers that eliminate potential competition and serial acquisitions. Notably, the ACCC previously thought these types of acquisitions were not captured by the existing SLC test and therefore strongly advocated for the test to include the CSE element (see the ACCC’s submission to Treasury’s Competition Taskforce Consultation Paper on Merger Reform).
Deal rationale will be critical: focus on startups and potential competitors
The ACCC’s current guidelines only refer to potential competition in passing and in the context of discussing potential competitive constraints on the merged entity post-acquisition. Notably, the new draft guidelines emphasise the competitive constraint of the threat of competition posed by the separate presence of a startup. The ACCC expresses a concern that the rationale of the acquisition by the established company may be to “neutralise the competitive threat it poses and to strengthen or entrench its position in the market”.
This means when operating under the new rules, being able to explain an efficient and pro-competitive deal rationale will be even more critical than ever.
According to the ACCC, there are two ways a merger can eliminate potential competition:
First, an incumbent firm may acquire a potential entrant and therefore eliminate future competition between the two parties (known as a ‘killer acquisition’).
Second, incumbent firms are incentivised to invest and/or improve their products because of the potential for new entry, and the acquisition may result in a loss of ‘dynamic competition’. The ACCC indicates that in assessing loss of dynamic competition, it may focus on entry and expansion in relation to specific products, but also more broadly on the impact of dynamic competition on investments for the future.
In its new draft guidelines, the ACCC has signalled sectors where potential competition will be more important than others. These sectors are those involving markets characterised by network effects (for example, digital platforms) and where significant and long-term investments are required to reach scale (for example, pharmaceuticals).
Roll up strategies
The ACCC considers the CSE concept could apply particularly where an incumbent is acquiring multiple potential competitors. The ACCC notes that [at 5.7]:
“Where an acquirer undertakes multiple acquisitions of nascent rivals as part of a concerted strategy over time, the effect may be to strengthen or entrench the acquirer’s market power, making subsequent entry more difficult.” (emphasis added)
As we previously outlined, the new merger laws expressly permit the ACCC to consider the cumulative effect of mergers put into effect in the last three years, including those that were not notified. According to the ACCC, the three-year ‘lookback’ allows it to assess any strategic business behaviour and take account of dynamic competition in markets.
‘Serial acquisitions’ refer to a firm which engages in a pattern of acquisitions in the same or a related markets. The ACCC’s current guidelines do not discuss serial acquisitions. However, according to the ACCC’s new draft guidelines, even if an individual acquisition within the series may not SLC, the combined effect of those acquisitions can raise competition concerns and suggests the CSE element can apply to serial acquisitions [at 5.38]:
“Serial acquisitions can enable firms to attain a position of substantial power in a market and erode competition. They can also be used by firms that already have a position of market power to extend or entrench that power.” (emphasis added)
The ACCC identifies several theories of harm by which serial acquisitions could potentially raise competition concerns, including by:
Incremental increases in market share: The acquiring firm incrementally increases its market share and over time creates a large firm that can exercise control over price, service, quality or other elements of competition.
Restricting the ability of smaller companies to reach minimum efficient scale: Small or potential competitors might face increased difficulty reaching minimum efficient scale as the size of the available market is reduced.
Brand portfolio coverage: The acquiring firm maintains a stable of brands, which gives the perception of choice, therefore making it harder for small rivals and potential entrants to establish a niche.
Chain on chain competition reduction: Reducing competition between chain stores by acquiring a store in a competing chain, which can impact market efficiencies, awareness and the competitive presence of the competing chain.
Vertical integration effects: The acquisition reduces competition at different or multiple functional levels of a market by limiting access to a downstream customer or an upstream input. For example, where a vertically integrated wholesaler acquires a series of retail stores, competing wholesalers may find it difficult to maintain economies of scale and offer competitive wholesale prices to the remaining independent retail stores.
Greater focus on economic analysis
Both Treasury and the ACCC have made it clear that they want to see more, and more quantitative, economic evidence in complex merger processes.
In line with this objective, the new draft guidelines provide considerably more detail on the economic tools the ACCC is currently using. These include calculating diversion ratios and price elasticity to assess closeness of competition, as well as economic factors to assess incentives to foreclose, where the data is available.
Further, the new draft guidelines contain more detailed discussion on the different types of efficiencies (i.e., productive, allocative and dynamic efficiencies) and clarify when efficiencies will be relevant to the ACCC’s assessment of the competitive effects of a deal (that is, in Phase 1 and Phase 2 of the ACCC’s review process), as opposed to public benefits (that is, in the ‘Substantial Public Benefits’ or Phase 3 of the ACCC’s review process). We previously outlined the different phases of ACCC’s review process under the new merger clearance regime.
According to the ACCC [at 6.23-6.24]:
“The ACCC will generally only consider merger-related efficiencies to be relevant to our merger assessment when there is clear and compelling information or evidence that the resulting efficiencies directly affect the level of competition in a market. That is, efficiencies that change the incentives of the merged firm and encourage it to compete more vigorously against rivals. These kinds of efficiencies are described as rivalry-enhancing efficiencies.
In cases when a merger is likely to achieve other types of efficiencies, these may be considered if a merger party makes a public benefit application.” (emphasis added)
The new draft guidelines provide limited detail on the ACCC’s proposed economic framework and tools for assessing more novel concepts that have been introduced in these new draft guidelines. These include potential competitive harms arising from acquisitions involving multi-sided platforms, integration into ecosystems, limiting access to data and/or interoperability (discussed further below).
Other novel concepts and theories of harm
It’s clear the ACCC has sought to refresh its merger guidelines by incorporating some of the more novel theories of harm and concepts that are emerging and subject of significant international debate. Some of these concepts have been considered by the ACCC in other contexts (for example, in its Digital Platform Services Inquiry and Ad Tech Inquiry). In addition to ‘killer acquisitions’ and ‘serial acquisitions’, the new draft guidelines also feature the following:
Non-price competition: Although the current guidelines acknowledge the role of non-price competition, the ACCC has sought to elaborate and expand on non-price competition in its new draft guidelines. For example, competition based on enhanced interoperability, a diverse range of goods or services, more staff in stores, generous returns or price-matching policies, enhanced level of privacy and environmental sustainability are expressly identified to be forms of non-price competition.
Role of ecosystems: Ecosystem theories of harm have emerged in the ACCC’s thinking, and more broadly in the global antitrust lexicon, since the current guidelines were last updated. These theories of harm are now expressed in the new draft guidelines. The new draft guidelines indicate that the ACCC will consider the role of ecosystems when assessing possible conglomerate effects – in particular, whether the merged firm may link sales by integrating the products within a digital ecosystem.
Multi-sided platforms: Multi-sided platforms supply services to two or more distinct but related customer groups (e.g., advertisers and consumers). While the current merger guidelines do not refer to this concept, the ACCC has dedicated a section of its new draft guidelines to mergers involving multi-sided platforms. In the ACCC’s view, while mergers involving platforms are generally analysed in a similar way to mergers involving differentiated products, there are some aspects of the analysis that are specific to platforms. Specifically, the ACCC indicates it will consider each side of a platform as a separate market while recognising that each side may affect the other. While there is little detail on the economic framework the ACCC intends to apply to these types of mergers, the ACCC says its approach to assessing will depend on a range of factors, including whether the merger will primarily affect one side or both sides of the platform, the different incentives the platform operator has on each side of the platform, the strength of any direct and indirect network effects, the risk of a tipping effect, the risk of amplifying market power (for instance, if interoperability or multi-homing is necessary to compete), the presence of any conflicts of interest and barriers to entry.
Interoperability and access to data: Interoperability and access to data are also new concepts that appear in the new draft guidelines. The ACCC considers that limiting access to data could be a way for a firm to foreclose its rivals or otherwise provide some benefit to the merged firm (the new draft guidelines are unclear as to what type of ‘benefit’ would be relevant). Similarly, the ACCC also considers limiting interoperability might also amplify market power, be a barrier to entry or be a way in which a merged firm seeks to foreclose rivals. However, it does recognise enhancing interoperability could be a mode of non-price competition or public benefit.
Public benefits: robust evidence required
An important change in the new process is the ability of merger parties, at Phase 3 of the process, to argue that a transaction introduces efficiencies or other public benefits that offset any competitive detriment that the ACCC finds. Previously, access to this public benefit test was only available through merger authorisation and not the standard clearance process.
Unsurprisingly, the new draft guidelines draw heavily on the analytic framework outlined in the most recent merger authorisation decision of the Competition Tribunal, when it considered and cleared ANZ’s acquisition of Suncorp Bank. Significantly, the ACCC indicates that it is not always necessary for cost savings to be passed on in the form of lower prices, as the community may benefit in other ways (for example, resource savings).
While acknowledging that public benefits cannot always be quantified, the new draft guidelines, in line with the ACCC’s general requirement for robust evidence, encourage quantification where possible. They require the provision of “extensive details” related to the data relied, the methodology, assumptions and reasoning and reasons for adopting them.
It remains to be seen whether the use of public benefit arguments becomes a valuable additional tool for merger parties, or whether Phase 3 simply delays the process before moving competition arguments into the Tribunal.
Next steps and further details we are waiting for
Following the consultation process, the ACCC will update and release its new merger assessment guidelines ahead of parties being able to notify mergers voluntarily under the new clearance regime from 1 July 2025. The ACCC anticipates it will update the guidelines over time, including to reflect decisions of the Tribunal as they occur.
There is still a lot of important guidance to come from both the ACCC and Treasury:
Merger process guidelines: The ACCC foreshadowed that it will publish draft merger process guidelines for consultation by the end of March 2025, which will include guidance on notification waivers, pre-notification engagement with the ACCC, remedies, timelines and when extensions are available.
Notification thresholds: Although the government released its proposed notification thresholds in October, we are still waiting for Treasury’s release of the draft legislative instruments that will contain the actual notification thresholds for consultation. The timing for the release has not been confirmed. According to the ACCC’s FAQs, the draft legislative instrument may clarify how turnover is calculated, the scope of the exemption for certain types of property, and the requirement for the target to have a material connection to Australia before an acquisition is required to be notified.
Notification forms: The final design of the notification forms will be also determined in a legislative instrument, which has yet to be released. The ACCC will provide guidance for when a simpler or longer notification form may be appropriate and has suggested there should be a “tailored approach to the information required upfront”.
Notification waivers: Under the new merger laws, a Treasury Minister may determine, by legislative instrument, the requirements for the ACCC to grant notification waivers. The ACCC indicated it will provide more information about the waiver process “later in 2025”.