On 4 August 2023, the ACCC denied an application for merger authorisation of Australia and New Zealand Banking Group’s (ANZ) proposal to acquire 100% of the shares of SGBH Limited (which owns 100% of the shares of Suncorp Bank) from Suncorp Group Limited (Suncorp Group) (Proposed ANZ/Suncorp Bank Acquisition). On 25 August, the parties lodged their appeal of the decision to the Australian Competition Tribunal (Tribunal).

The ACCC’s decision has attracted substantial interest, as the first significant ACCC opposition to a merger in the banking sector since the National Australia Bank’s (NAB)/AXA decision in 2010 (under the informal clearance process), and particularly in the context of considering ACCC engagement strategies, and upcoming proposals for merger reform. 

We consider some of the key implications in this update, including:

• Scrutiny of mergers in the banking and financial services sector. The decision is consistent with a global trend to scrutinise mergers in the banking and finance sector closely.
• Managing risks of alternative buyer counterfactuals in sale processes. The decision reflects a reminder to ensure proper consideration of the potential effects that other bidders may have in a sale process.
• Mergers in concentrated industries and coordinated effects theory of harm. The decision relies on a less used theory of harm based on “coordinated effects” that may arise from mergers in industries perceived to be concentrated, even where the merging firms combined, are not dominant.
• Public benefits. What and when can they be taken into account? What detriments can be considered? The decision relies on the recent Tribunal decision in the Telstra/TPG spectrum merger authorisation application to suggest a strict approach to the public benefits that are relevant to the ACCC’s consideration.
• ACCC engagement strategy for merger review. Strategic and procedural considerations in deciding whether to engage with the ACCC through the current merger authorisation process versus the ACCC’s informal merger clearance process, including timing and certainty, the legal burden of proof issues and appeal pathways.
• The ACCC’s proposed merger reforms, and specifically the ACCC’s proposal to reverse the onus of proof in the proposed mandatory clearance process (for more on this topic, see: The ACCC’s recommended merger reforms: A deeper dive).

Background to the Proposed ANZ/Suncorp Bank Acquisition, the merger authorisation application and the ACCC’s determination to deny authorisation

In Australia, merger parties can make an application to the ACCC for ‘merger authorisation’. The ACCC can grant authorisation if it is satisfied that the transaction:

• would not be likely to have the effect of substantially lessening competition (SLC); 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).

If the ACCC grants merger authorisation, it provides the merger parties with statutory immunity from any court action taken under section 50 of the Competition and Consumer Act 2010 (Cth) (CCA) which prohibits acquisitions that would have the effect or likely effect of SLC. 

The ACCC’s recent decision to deny merger authorisation of the Proposed ANZ/Suncorp Bank Acquisition was due to it not being satisfied that, in all the circumstances:

• it would not be likely to have the effect of SLC in the markets for home loans, the supply of small and medium (SME) banking services to customers in Queensland and the supply of agribusiness banking products to customers in Queensland; and
• it would result or likely to result in a benefit to the public that would outweigh the detriment to the public that would result or be likely to result from the Proposed ANZ/Suncorp Bank Acquisition.

The ACCC’s decision to deny merger authorisation follows 6 months after ANZ lodged the application for merger authorisation in December 2022 and over 12-months since the merger parties announced the Proposed ANZ/Suncorp Bank Acquisition in July 2022.

During the merger authorisation application process, the ACCC received:

50+ submissions from the merger parties and other interested third parties

27 witness statements

12 expert reports (plus 3 further expert reports it commissioned itself)

200,000+ documents obtained from the merger parties and other third parties using its compulsory evidence gathering powers under section 155(1)(a) and (b) of the CCA

The ACCC also undertook examinations of various individuals to test and obtain further information using its compulsory examination powers under section 155(1)(c) of the CCA.

Regulatory scrutiny of mergers in the banking sector

The ACCC’s record on banking mergers is mixed. 

Against a background of the global financial crisis in the late 2000s, and concerns for the stability of the banking sector, the ACCC did not oppose informal clearance applications in the Westpac-St.George Bank transaction, nor the Commonwealth Bank of Australia’s (CBA) acquisition of BankWest. By 2010, however, the ACCC was concerned that NAB acquisition of AXA would stifle innovation and prevent a rival bidder (AMP) from becoming the “Fifth Pillar” in banking. 

Since that time, the ACCC did not oppose CBA’s acquisition of Aussie Home Loans, Westpac’s acquisition of Lloyd’s Australian business, and more recently, NAB’s acquisition of the banking start-up, 86 400. Meanwhile, the ACCC was directed by the Federal Treasurer to conduct two inquiries into mortgage pricing and home loan competition in 2019, and more recently in 2023, retail deposits. The Productivity Commission also examined Competition in the Australian Financial System in 2018.

While the record is mixed, it is undeniable that the sector is heavily scrutinised, and not just on competition grounds. The Australian Prudential Regulation Authority (APRA) prudential requirements are often in tension with the drive for competition.

It is in this context that ANZ’s application for authorisation of its proposed acquisition of Suncorp Bank was considered.

‘Realistic’ alternative buyer counterfactuals

The ACCC’s assessment of ANZ’s application required it to consider the state of competition in the future with (the factual) and the future without the Proposed ANZ/Suncorp Bank Acquisition (the counterfactual). The purpose of this exercise is to isolate the effects that arise as a result of the merger in question, as opposed to effects that may occur regardless of whether the merger proceeds (e.g., as a result of changes in regulation or economic conditions). 

Typically, the relevant counterfactual is the status quo. Here, however, the ACCC concluded that there was a “range of potential outcomes” and based on the evidence the two counterfactuals that had a “realistic prospect of occurring” were:

1. Suncorp Bank continuing to operate under the ownership of Suncorp Group (the status quo, or No-Sale Counterfactual); or
2. Suncorp Bank being acquired by or merging with another second-tier bank, specifically by or with Bendigo and Adelaide Bank (the Bendigo Merger Counterfactual).

The use and evidentiary standard of the counterfactual analysis has been considered extensively in past merger cases such as ACCC v Metcash Trading Ltd (2011) 282 ALR 464 and Australian Gas Light Company v ACCC (No 3) [2003] FCA 1525. More recently in ACCC v Pacific National Pty Limited (No 2) [2019] FCA 669, Beach J considered the counterfactual analysis and synthesised the reasoning in Metcash and Australian Gas Light Company into the following points:

• the phrase likely to have the effect of a SLC requires only a “real chance” (at [1274]);
• the standard of “real chance” is concerned with “real commercial likelihoods, not with mere possibilities, however plausible they might be” (at [1275]); and
• the assessment of likely effect of SLC poses one question involving one evaluative judgment, with that one evaluative judgment to be assessed on the basis of a “real chance” (at [1276]).

Notably, the counterfactual analysis does not involve an assessment of whether the Proposed ANZ/Suncorp Bank Acquisition is the transaction that is preferred by the target/seller, whether due to a higher bid price or otherwise. Rather, the counterfactual analysis requires an assessment of the likely state of competition in a future without the acquisition in question (i.e., where the Proposed Acquisition was off the table).

Significantly, although the ACCC has considered the Proposed ANZ/Suncorp Bank Acquisition against two counterfactuals with realistic prospects of occurring, the Federal Court in Metcash has previously held that the ACCC must satisfy the court that its counterfactual is “more probable” than any competing hypothesis advanced for the purposes of identifying the relevant counterfactual in an assessment of whether there has been a breach of s 50 of the CCA. Subsequent competition cases in Australia have not had to grapple with the possibility of more than one counterfactual with ‘realistic prospects’ of occurring, so it will be interesting to see the position taken by the Tribunal. It is worth noting that the New Zealand High Court has taken the position that it is possible for there to be more than one counterfactual provided that each of the counterfactuals has a realistic prospect of occurring and, for the purposes of a merger clearance decision, the SLC would only need to occur in one of these counterfactuals for it to be denied: Woolworths Ltd v Commerce Commission (2008) NZCCLR 10 [122]. 

The merger parties vigorously disputed the Bendigo Merger Counterfactual, contending that the No-Sale Counterfactual was the most likely.  However, although the ACCC considered that the No-Sale Counterfactual was a realistic counterfactual, it was not the only realistic counterfactual.  Taking into account all of the conflicting evidence, the ACCC concluded that there was a “realistic commercial likelihood” that absent the Proposed ANZ/Suncorp Bank Acquisition, Bendigo and Adelaide Bank Limited would make an offer to acquire Suncorp Bank, with such offer being considered and accepted following negotiations. This appears to be at least in part due to internal Suncorp Group documents the ACCC received which indicated that the second-best option was for Suncorp Bank to merge with a regional bank, preferably Bendigo and Adelaide Bank, and contemporaneous documents of an adviser to Suncorp suggesting that a sale to Bendigo and Adelaide Bank would be “value accretive.” 

The ACCC also considered:

• updated external analysis provided to Suncorp Group (this included metrics that did not support the Board recommending a transaction with Bendigo and Adelaide Bank in the interests of shareholders) – the ACCC placed less weight on this due to its timing, and because it considered it had incomplete methodology and was inconsistent with earlier documents;
• the incentives and abilities of both Suncorp Bank and Bendigo and Adelaide Bank to merge (including the benefits of Suncorp separating its insurance and banking business, and Bendigo and Adelaide Bank’s strong commercial incentives from a scale perspective);
• the potential risks and challenges of such a merger (including execution and integration risk, noting that the ACCC did not consider the risks of integration between Suncorp Bank and Bendigo and Adelaide Bank as being prohibitively higher than general integration risks); and
• the competitiveness of a combined Suncorp Bank and Bendigo and Adelaide Bank (concluding that it would create a larger second-tier bank that would be able to grow its market share through increased non-price competition and trigger a competitive response from the major banks).

Despite the issues raised by the merger parties, the ACCC was ultimately of the view that if Bendigo and Adelaide Bank put a formal offer to Suncorp Group that, as a public company, it would need to consider whether it was in the best interest of its shareholders, and that there is a “reasonable commercial likelihood” that a mutually beneficial agreement could be reached. 

The ACCC considered that it could not be satisfied that the Proposed ANZ/Suncorp Bank Acquisition would not likely SLC as against either counterfactual. The ACCC considered a combined Bendigo and Adelaide Bank and Suncorp Bank would “both strengthen and diversify the competitive fringe of challenger banks in a way that is likely to reduce the ability and incentive of major banks to engage in coordination”. 

Application of coordinated effects theory of harm

A key plank of the ACCC’s decision to deny merger authorisation was based on a theory of “coordinated effects” in home loan competition. That is, the ACCC considered that, if the Proposed ANZ/Suncorp Bank Acquisition proceeded, the market conditions were conducive to an increased risk of tacit collusion.

The ACCC’s economic experts explained that there are certain features of markets that make them more conducive to coordination between firms. Broadly speaking, it is easier for firms to initiate and sustain cooperative behaviour where there is high market concentration, symmetry between firms, opportunities to communicate pricing intentions, price transparency, consumer choice frictions, frequent interactions between firms, low levels of innovation and stable market conditions.

The ACCC identified that certain features that it considered characterised the home loans market would make coordination more likely. According to the ACCC, these features included relatively high levels of concentration, high barriers to sustainable entry, a relative level of symmetry between the four major banks and high degree of pricing transparency, with frequent public announcements on price movements.

The ACCC considered the acquisition would increase the likelihood of coordination in the home loans market in several respects. In particular:

• the acquisition would reduce asymmetry among major banks through ANZ’s resulting gain in shares (to edge closer to the other major banks), changing ANZ’s funding sources (reducing ANZ’s more diverse funding base) and increasing ANZ’s domestic focus; 
• the acquisition would increase ANZ’s incentives to coordinate in home loans through its acquisition of an additional 1.2 million customers rather than needing to grow its business organically and 
• ANZ would have a stronger incentive to compete with the other major banks under a counterfactual where Suncorp Bank merged with another second-tier bank (see below), particularly because such a combined entity would likely pose a stronger competitive constraint to the major banks engaging in coordination than the ‘status quo’.

For the retail deposits market, the ACCC considered coordination would be less likely to occur as deposits are an important source of home loan funding.

Although the ACCC also denied ANZ’s application based on unilateral effects theory of harm in relation to agribusiness and SME banking products in Queensland, its focus on a coordinated effects theory of harm in relation to home loans is relatively less typical. While this theory of harm is set out in its Merger Guidelines, the ACCC has historically rarely relied on coordinated effects to oppose a merger and has only recently done so in its denial of the merger authorisation application for Telstra / TPG in December 2022 (although in February 2021 it raised coordinated effects concerns in Aon / Willis Tower Watsons prior to the parties withdrawing the application). Prior to this, the ACCC had also raised coordinated effects concerns in Caltex Australia / Mobil Oil (opposed in 2009) and in Link Market Services / Newreg Registries (opposed in 2010). Coordinated effects was only mentioned in passing by the ACCC’s public competition assessment of Westpac’s acquisition of St George (and not at all for CBA’s acquisition of Bankwest and St Andrews). 

Notably, the ACCC’s approach reflects some of the current global trends in merger enforcement. For example, the United States Department of Justice (DOJ) has recently signalled a change in approach to its assessments of bank mergers. In a 20 June 2023 speech, Assistant Attorney-General of the DOJ Johnathon Kanter identified two key areas that will be of “particular interest”, with the first of these being that the DOJ intends to closely scrutinise bank mergers that increase the risks associated with coordinated effects, as well as examining the extent to which mergers threaten to entrench the power of dominant banks through the exclusion of existing or potential disruptive threats or rivals. 

Public benefits claimed by ANZ

ANZ claims several public benefits, including that:

• Suncorp Group would become a stronger insurer (through the divestment of Suncorp Bank) and
• ANZ would become a stronger bank, and prudential related benefits and benefits for the Queensland economy and Queenslanders. The latter includes ANZ’s commitments contained in separate implementation agreements with the Queensland government for investment in a tech hub in Brisbane and financial commitments (including $25 billion in lending for renewable energy projects and $10 billion of additional lending for Queensland businesses).

As set out above, section 90(7)(b) of the CCA requires the ACCC to be satisfied in all the circumstances that the conduct would result, or be likely to result, in a benefit to the public and the benefit would outweigh the detriment to the public that would result, or be likely to result, from the conduct.

In considering ANZ’s public benefit claims, the ACCC referred to the Tribunal’s recent decision in Applications by Telstra Corporation Limited and TPG Telecom Limited (No 2) [2023] ACompT 2 (Telstra/TPG Tribunal Decision), which rejected evidence of public benefits that were not sufficiently causally related to the merger. 

In the case of ANZ’s public benefit claims, the ACCC considered that the commitments and agreements made to the Queensland government were not causally connected to the Proposed ANZ/Suncorp Bank Acquisition, and therefore could not be taken into account, based on the Tribunal’s reasoning in Telstra/TPG.  Regardless, the ACCC considered that even if all of ANZ’s claimed public benefits could be taken into account, the magnitude of those benefits was not sufficient to outweigh the ACCC’s view on detriments resulting from the Proposed ANZ/Suncorp Bank Acquisition, including detrimental competitive impact on the Australian retail banking more generally that extended beyond the specific markets considered, given the wide ambit of s 90(7)(b).  In particular, the ACCC considered that significant detriment would result from the removal of a meaningful opportunity for second-tier banks to gain scale that would further entrench the current market structure.

Strategic and procedural considerations under current merger regime

The ACCC’s decision to deny authorisation of the Proposed ANZ/Suncorp Bank Acquisition highlights some important strategic considerations for merger parties when choosing their regulatory approval options.  In particular, the decision calls into question the strategic benefits of the merger authorisation pathway in several respects:

Timing

Under the merger authorisation process, the ACCC has a statutory deadline of 90 days from a valid application being lodged to make its decision, which cannot be extended except with the consent of the merger parties.  If the ACCC does not make its decision within the 90 days, it is deemed to have refused authorisation.  In contrast, the ACCC’s informal merger clearance process has no statutory timeframes (although the ACCC provides some guidance on the likely timeframes, it is not bound by them).  However, for complex matters involving significant volumes of evidence and submissions, 90 calendar days is a short period of time. Accordingly, we have recently observed that in many recent merger authorisation matters, the ACCC has sought significant extensions from the parties, calling into question any previously perceived timing benefit of the process.

In ANZ/Suncorp Bank, the ACCC’s review time was 246 days – more than 2.5 times the 90-day statutory timeframe.  In this case, the ACCC sought and was granted multiple time extensions, including because the application being lodged just prior to the December-January period (a holiday period for most in Australia, which meant there was limited time for meaningful consultation with interested parties), delays in the parties’ responding to the ACCC’s information requests, issues with the documents produced to the ACCC, and because additional expert evidence and submissions were filed late in the process.

The current average total review time for merger authorisations is almost 200 calendar days, over double the statutory time period.  The following table is a summary of the timeframes taken in merger authorisation applications and decisions since 2017:

Merger authorisation	Review time in calendar days
	ACCC	Tribunal	Total
ANZ/Suncorp Bank	246 days	TBC	TBC
Linfox Armaguard / Prosegur Australia (2023)	260 days	N/A – no review	260 days
Telstra and TPG (2023)	213 days	180 days	395 days
Amalgamation of BPAY, eftpos and NPPA (2021)	172 days	N/A – no review	172 days
Gumtree AU / Cox Australia Media Solutions (2020)	108 days	N/A – no review	108 days
AP Eagers / Automotive Holdings Group (2019)	88 days	N/A – no review	88 days

In contrast, over the last three years, the average timing of merger reviews assessed publicly by the ACCC under the informal merger clearance process was 120 days overall, or 63 calendar days if no statement of issues (i.e. did not proceed to phase 2 review) and 200 calendar days with a statement of issues (i.e. proceeded to phase 2 review).  This begs the question of whether the merger authorisation process has any real advantage from a timing certainty perspective.

Legal burden of proof and discretion

To authorise a merger under s 90(7) of the CCA, the ACCC must be positively satisfied in all the circumstances that a transaction will likely not SLC, or that the likely public benefits would outweigh the likely public detriments.  Further, satisfying these elements only enlivens the ACCC’s discretion to exercise its power to grant the authorisation – section 88(1) of the CCA provides the ACCC may grant authorisation if the test in s 90(7) is met.  As observed recently by the Tribunal in the Telstra/TPG Tribunal Decision at [127], while the ACCC or the Tribunal are not obliged to do so, they would “ordinarily” grant authorisation if either were satisfied that the conduct was likely to result in a net public benefit. Accordingly, the merger authorisation process is akin to a discretionary administrative decision, and the applicant bears the onus of convincing the ACCC of this.  In contrast, under s 50 of the CCA (and therefore in any injunctive actions taken by the ACCC), mergers are only prohibited if they have the effect or likely effect of substantially lessening competition.  Therefore, if the ACCC seeks to block a transaction, the evidentiary burden is on the ACCC to prove that a transaction will SLC, and this is assessed on a balance of probabilities. 

It can therefore be significantly more challenging for merger parties to use the merger authorisation process to prove the competition element of the test, compared with satisfying the standard of proof applicable when defending the lawfulness of a merger under s 50 of the CCA. 

For mergers where there are likely to be competition concerns, but there are otherwise net public benefits that can be proven, merger authorisation may be the preferred choice.  However, where the parties consider they have strong competition arguments that there is no likely effect of SLC (as opposed to not being able to rule out a likely effect of SLC) and where there are no or limited public benefit claims that are directed connected to the proposed conduct in the application, there would appear to be very little strategic advantage (and likely a disadvantage) to take the merger authorisation route over the ACCC’s informal clearance pathway.

Public process

The merger authorisation process is a public process under which the ACCC is required to, amongst other things, publish interested party submissions and evidence on the register subject to valid confidentiality claims for withholding certain documents from being published and/or redacting certain information from public versions of the document.  In contrast, although merger parties will receive summarised and anonymised feedback received by the ACCC during its market inquiries in the informal clearance process, the ACCC does not publish or provide the merger parties with copies of interested party submissions. While the merger authorisation process does provide the merger parties with more transparency than they could obtain under the ACCC’s informal merger clearance process, conversely the authorisation process may also commit potential alternative buyers to be more public about, and dedicate more resources into advocating for, a competing counterfactual.

Appeal and review processes

Another strategic consideration on choosing between the merger authorisation process and the ACCC’s informal merger clearance process is the avenues to appeal or review avenues. 

Merger parties can appeal an ACCC merger authorisation decision to the Tribunal for a limited merits review within 21 days of the determination.  ANZ and Suncorp Group have taken this route. The Tribunal has 90 days to make its decision (or extended to 120 days if new information, documents or evidence is admitted). Accordingly, there are strict timelines for a Tribunal review under the merger authorisation process.

However, the Tribunal can only make its decision based upon the materials that were before the ACCC, although it has the discretion to allow or request further evidence that was in existence at the time of the ACCC’s decision or to address new circumstances. While the Tribunal has discretion to request further evidence clarifying the materials that were before the ACCC, this does not extend to providing parties with any right to access evidence testing the reliability or credibility of that material. Specifically, there is no ability for merger parties to cross-examine the ACCC’s witnesses or seek discovery of documents.

Although parties could also seek judicial review of ACCC merger authorisation decisions in the Federal Court, it is limited only to questions of law.  The Full Federal Court can review the Tribunal’s determination regarding appeals of ACCC merger authorisation decisions, but again also only on questions of law.

Practically, based on these limitations, it would appear challenging for parties to overturn an ACCC decision to deny merger authorisation, including because of the discretionary nature of the ACCC’s power to grant authorisation (as discussed above). The Tribunal in TPG/Telstra confirmed that the ACCC is not required to grant authorisation even where the statutory preconditions set out in s 90(7) are satisfied.

In contrast, although there is no Tribunal appeal option for a party where the ACCC opposes a decision under its informal merger clearance process, merger parties do have the option of either (i) seeking a declaration from the Federal Court that the merger does not breach s 50; or (ii) proceeding with the acquisition and defend the ACCC’s proceedings in the Federal Court for breach of s 50 of the CCA, in which the ACCC has the burden of establishing that the acquisition is has the likely effect of SLC. Under both of these avenues, merger parties have a broader scope to test the ACCC’s evidence, including cross-examining the ACCC’s witnesses and seeking discovery of documents. For example, TPG and Vodafone successfully obtained declaration that their proposed merger was not have the likely effect of SLC under s 50 of the CCA following the ACCC’s decision to oppose it under the informal merger clearance process: Vodafone Hutchinson Australia Pty Ltd v ACCC [2020] FCA 117.

The ANZ/Suncorp Bank experience illustrates the profound impact that strategic choices as to process may have on substantive outcomes. In particular, the merger authorisation pathway seems to provide little strategic benefit compared with the ACCC’s informal clearance process unless parties have weak competition arguments coupled with strong public benefit grounds that are connected directly to proposed conduct in the application.

ANZ and Suncorp group tribunal appeal

As noted above, the parties lodged their applications to appeal to the Tribunal on 25 August 2023, articulating the following key issues, summarised below:

• The relevant markets to be analysed.
• What are the appropriate counterfactuals:
  • Whether an acquisition by Bendigo and Adelaide Bank of Suncorp Bank is commercially realistic.
  • Even if it is commercially realistic, is a merged Bendigo and Adelaide Bank/Suncorp Bank likely to be a more effective competitor in home loans, SME and agribusiness banking, than Bendigo and Adelaide Bank or Suncorp Bank alone?
• Would the Proposed ANZ/Suncorp Bank Acquisition be likely to result in coordinated effects in the home loans market? This includes considering whether the market is currently conducive to coordinated effects and if the merger would be likely to increase any likely coordinated effects.
• Whether the Proposed ANZ/Suncorp Bank Acquisition is likely to result in any SLC in relation to SME banking products, including considering whether Suncorp Bank is currently an effective constraint and whether existing competitors and the threat of expansion and entry are sufficient to replace the loss of any competitive constraint. Similar issues are outlined regarding agribusiness to the extent it is a separate market from the services to SME customers.
• Whether the public benefits identified outweigh any detriment likely to result, including the ability of Suncorp Group to have a singular insurance focus, the cost synergies, prudential safety benefits, lower funding costs, Queensland commitments by ANZ, and finally whether competitive detriments to the Australian banking industry more broadly that are not connected to the assessment of competition in any specific market should have been considered.

Implications for ACCC’s proposed merger reforms

The Federal Treasurer Dr Jim Chalmers and Assistant Minister for Competition, Charities and Treasury Andrew Leigh jointly announced on 23 August 2023 that the Government has established a Competition Taskforce, supported by an expert panel which includes Danielle Wood (CEO of the Grattan Institute) and Rod Sims (former ACCC Chair), to undertake a review of competition policy, which includes consideration of the ACCC’s proposals for merger reform. As discussed in our previous article The ACCC’s recommended merger reforms: A deeper dive, the ACCC has recommended in its proposed merger reforms (amongst other things):

• a mandatory and suspensory merger notification regime, under which mergers that meet certain thresholds (likely based on the merger parties' turnover and/or transaction value) must be notified to and cleared by the ACCC before the transaction can complete; and
• to reverse the onus of proof in the competition assessment, requiring merging parties to demonstrate on the balance of probabilities that a merger is unlikely to SLC. 

While the reversal of onus of proof is akin to what is currently required under the formal merger authorisation process, the critical difference under the ACCC’s proposed mandatory regime is that merger parties that meet the notification threshold must seek ACCC clearance. In contrast, there is currently no statutory obligation on merger parties to seek formal authorisation, and where the ACCC chooses to take enforcement action against merger parties to prevent completion, it is the ACCC that has the onus of proof. The mixed success of recent merger authorisations (including in ANZ/Suncorp Bank) demonstrates how a reversal of onus to prove the absence of SLC effects can play out for merger parties. Importantly, it highlights why the ACCC and Government should carefully consider the implications of reversing the onus of proof in a mandatory and suspensory merger control regime.