A global perspective on Australia's merger control reforms

At the close of 2024, the Australian Government enacted the biggest overhaul of Australia's merger control regime in over half a century.

While many of the changes, such as a move to mandatory notification, simply align Australia with international best-practice, the law also introduces a host of novel changes targeting longstanding pain points raised by the Australian regulator. Roll-up acquisitions by private equity firms, 'killer acquisitions' by large businesses, and deals in problem-industries (such as healthcare, supermarkets, and hardware) will come under the microscope under the new regime. These deals will face greater hurdles from 2026.

With many international regulators expressing similar concerns, lawmakers across the globe will be watching closely from 1 January 2026 to see how the reforms unfold in practice – the Australian reforms could also foreshadow similar changes in other jurisdictions.

This article briefly explains the key changes, how they differ from the current process, and the key implications for overseas dealmakers making acquisitions in Australia.

 

Overview of changes

Introduction of a mandatory notification process

Under the current regime there are no obligations to notify deals to the Australian regulator, the ACCC. Rather, parties conduct a risk-assessment to determine whether notification is necessary based on the prospects of the regulator investigating or taking court action to block or unwind the deal if it considers it likely to be anticompetitive.

There are currently two paths to gain regulatory approval of a deal:

• a formal authorisation process, which is provided for by the legislation and provides protection from third party litigants and ACCC enforcement; and

• an informal clearance process, which has been developed by the ACCC over time and provides for a more flexible process to get comfort from the ACCC – though it does not provide protection from third party litigants. Under the current regime, the vast majority of notified deals are cleared via the informal route.

Under the new regime, deals that meet specified thresholds must be notified to the ACCC and will be suspended pending approval. In other words, these deals cannot complete without ACCC clearance.

The new notification process is similar to other jurisdictions, requiring the acquirer to submit a formal authorisation application which is then assessed and determined by the regulator. In contrast to the current process, the new process will introduce an application fee (between AUD50,000 and AUD100,000) and specify up-front information requirements for applications. The ACCC will also have the ability to impose conditions on authorisations, and parties will have limited appeal rights via the Australian Competition Tribunal.

While the reform package promises faster decision timelines, it remains to be seen whether this can be delivered. A two-phase process, where simple deals can be cleared at phase one (30 working days), while more complex deals are referred to phase two (90 working days), will provide increased certainty for deal timelines. The ACCC expects that between 80 and 90 percent of reviews will be completed in 15 to 20 working days.

However, the increased number of notified deals, the regulator's ability to extend review periods through "clock-stoppers", and the additional work required upfront to comply with new information requirements may lengthen the overall process for some deals.

Notification thresholds

While the draft notification thresholds are yet to be set in stone (with further consultation expected in early 2025), the latest draft adopts three monetary thresholds, as set out in the diagram below.

The three-year cumulative turnover threshold introduces a novel approach to targeting serial acquisitions. Parties will be required to aggregate all deals in the same industry over the past three years when calculating the thresholds. In practice, this could result in very small, benign, acquisitions (with targets as little as AUD2 million turnover) requiring notification.

Further, in calculating the monetary thresholds, parties will be required to factor in revenues of a yet-to-be-defined acquiror group. This could result in parties that make a large number of acquisitions needing to notify almost every deal (including acquisitions of assets and property).

Targeted thresholds

The government will also introduce targeted thresholds, focussed on industries of concern. Likely candidates for targeted thresholds will include concentrated markets such as supermarkets, healthcare and diagnostics and digital platforms, as well as any acquisitions by private equity firms.

Waivers

Helpfully, the legislation makes provision for the ACCC to waive notification requirements in certain circumstances. While limited information has been provided about this process, this provides a useful opportunity to potentially reduce the burden of the notification requirements for low-risk deals.

Changes to the substantive test

While the new process is largely conventional from an international perspective, the changes to the substantive test applied by the regulator introduce a novel approach to targeting serial or creeping acquisitions (where a firm gradually increases its market share by making multiple individual acquisitions, none of which individually meet the threshold to block the acquisition).

Under the new substantive test, when considering whether to block an acquisition, the regulator will be able to consider the aggregate impact on competition of all deals completed in the preceding three years in the same industry. This change to the substantive test is in addition to the new three year notification requirement, discussed above.

For some deals the new test will add significant complexity when assessing the competitive effects of the acquisition – requiring the hypothesising of complex counterfactuals and factoring in multiple deals stretching back three years from the deal date.

The change was expressly introduced to target serial acquisitions, with private equity firms receiving a special call out. Practically, the change will make it more challenging for private equity firms to execute aggressive consolidation strategies and may require businesses to rethink the timing and sequencing of acquisitions in their pipelines.

The reforms will also tweak the existing test of whether an acquisition has the 'effect or likely effect of substantially lessening competition in a relevant market'. The Act will now clarify that an acquisition can substantially lessen competition by 'creating, strengthening or entrenching a position of substantial market power'.

The general consensus amongst Australian competition lawyers is that this tweak will not significantly alter the existing merger test, which already permits the consideration of the impact on the buyer's market power. However, the change signals an increased focus on market power in the assessment of a deal's competitive effect and we expect that the regulator will be eager to test the limits of the amended test, which could result in challenges for some acquisitions, particularly for larger firms in highly concentrated markets.

 

Practical implications for Australian deals

With signs pointing towards a surge in Australian M&A activity in 2025, it is important that firms planning deals in Australia consider the implications of the new regime. Key considerations include:

• Timing: Compulsory notification will remove the flexibility previously afforded under the ACCC's informal process and prescriptive information requirements will mean that greater preparation will be needed prior to execution. The new process will need to be factored into deal timelines, including sunset dates.

• Efficient processes: The proposed notification thresholds will capture many deals that would not be notified under the current regime. For larger businesses that make a number of acquisitions, this could mean that almost every acquisition is notifiable. In these cases, efficient processes will be critical to ensure simple transactions are cleared quickly and do not blow out deal timelines. Large businesses should consider:
  • preparing a standardised ACCC notification form for 'routine' transactions to simplify and partially automate the notification process; and
  • implementing reporting requirements for subsidiaries and developing a database of information required by the regulator to enable smooth and prompt preparation of applications.

• Transition period: While most of the changes will not come into effect until January 2026, the changes will impact deal timelines in 2025 as the ACCC transitions to the new process, while dealing with an expected influx of deals seeking a green-light under the current informal process, before the introduction of the new regime.
  • The current informal clearance process will be available until the end of 2025. However, deals that are not approved prior to 1 January 2026, will need to transition to the new mandatory notification process (if a waiver cannot be obtained).
  • Applicants who receive ACCC approval for a deal prior to 1 January 2026, will have 12 months to close the deal without needing to notify under the new process. The ACCC will soon consult on how it will transition deals that are not approved by 1 January 2026 to the new regime, and we expect that guidelines will be published in Q2 of 2025.
  • We expect delays for all deals from April 2025, as the ACCC begins implementation of the new authorisation process and faces an influx of applications seeking approval prior to the implementation of the new regime.
  • Depending on the complexity of the deal, there is a risk for clearance applications made in the second half of 2025, as the ACCC may not make a decision before the new regime comes into effect. These deals will then require mandatory notification. Parties considering complex deals in this period should consider applying under the new regime, which is available on a voluntary basis from July 2025.
  • Deal documentation should include conditions precedent which deal with transition to the mandatory notification process, if approval is not provided by January 2026.

• Complex transactions: The changes to the substantive test could mean that some deals will face increased scrutiny, including deals by private equity firms and other businesses with aggressive consolidation strategies, as well as in target industries. These businesses need to have regulatory strategy front of mind, when considering the timing and sequencing of their deal pipeline.

 

We're here to help

DLA Piper's competition and regulatory team has extensive experience in all aspects of Australian merger control, from simple clearance applications to contested proceedings in the Australian Competition Tribunal and Federal Court.

Please reach out to our team if you have any questions about the new regime and how it impacts your business.