Australia: Insolvency practitioners take note: The ACCC may oppose the sale of assets in a liquidation

Last Updated: 23 February 2014
Article by Michael Sutton
Focus: ACCC's decision to oppose the proposed acquisition by Sonic Healthcare of assets in the Delta Imaging Group
Services: Competition & Consumer Law, Commercial, Financial Services
Industry Focus: Financial Services

The Australian Competition and Consumer Commission (ACCC) announced, earlier this year, that it will oppose the proposed acquisition by Sonic Healthcare of assets in the Delta Imaging Group, which is in liquidation.

This decision is a reminder to all insolvency practitioners of one of the potential hurdles that may need to be overcome when selling the assets of an insolvent company.

When selling and purchasing shares or assets, insolvency practitioners must consider section 50 of the Competition and Consumer Act 2010, and sufficient time should be allowed for the resulting issues to be assessed and managed appropriately.

This provision applies to all types of corporate insolvencies: receiverships, administrations and liquidations.

Section 50 of the Competition and Consumer Act

Under section 50, a corporation must not directly or indirectly acquire the shares or assets of another, if that acquisition would have the effect, or likely effect, of substantially lessening competition in any market for goods and services in Australia.

The market in which the effect on competition is assessed will depend on factors such as the type of industry and the type of asset involved. Geographically, it will not necessarily be a national market – it may be assessed at a State/Territory, regional or local level (as was the case with the proposed Sonic acquisition).

The legislation provides guidance as to the matters that may be taken into account in determining the effect on competition, such as market concentration, barriers to entry, countervailing market power, the availability of substitutes and whether the acquisition would remove an effective competitor from the market.

This analysis must be undertaken for any material acquisition and, where appropriate, the ACCC undertakes a merger review process.

ACCC merger review process

The ACCC publishes specific Merger Review Guidelines. These are detailed but essentially provide for a process that is driven by the level of enquiries that the ACCC is required to make. A brief review, where no further market enquiries are necessary, can be conducted in as little as two – four weeks. For acquisitions where the ACCC needs to make enquiries of, and seek submissions from, competitors and other market participants, the review process can take up to six months (or longer in particularly complex cases). If an insolvency practitioner wants to achieve a quick sale of a company's assets they need to be aware that the merger review process may prevent that.

The "informal" clearance process, which is the one typically used by applicants, does not provide absolute clearance and a guarantee that the ACCC will not oppose the acquisition, but it does provide comfort to the parties that the ACCC is very unlikely to oppose it. The ACCC can be approached on a confidential basis.

The purchase of assets from a company that has been placed into administration, liquidation or receivership may require ACCC clearance, depending upon the identity of the purchaser, the assets, and the insolvent company. Where clearance is not sought and the acquisition proceeds, there is the risk that the ACCC may seek, from the Federal Court, pecuniary penalties against the parties, a divestiture order winding back the transaction or an injunction blocking the acquisition. Corporate executives may also face disqualification orders.

It is worth noting that Court-imposed fines can be significant, being up to $10 million, or three times the total value of the benefits obtained from that breach, or, where the value of the benefits cannot be determined, 10% of the annual turnover of the company and its related bodies corporate in the 12 months prior to the breach of the Act.

Anyone that aids, abets, counsels, procures or induces a breach of the Act, or that is knowingly concerned in, or party to, such a breach can also be penalised. It is easy to see how this could, in certain circumstances, apply to the insolvency practitioner managing the sale if they were not careful.

Proposed acquisition by Sonic Healthcare

In the matter at hand, the ACCC formed the view that the proposed acquisition would likely have the effect of substantially lessening competition in the market for the supply of MRI services in Newcastle and Maitland, and the market for the supply of general diagnostic imaging services in Maitland. It was noted that:

  • the proposed acquisition would remove a significant competitive constraint on Sonic, particularly with pricing
  • there were high barriers to entry so new market entrants would be unlikely to constrain Sonic
  • the remaining competitors (public hospital providers) were unlikely to impose a sufficient constraint on Sonic.

This decision does not in itself prevent Sonic from proceeding with the acquisition, but it does suggest that the ACCC would challenge the acquisition in the Federal Court if it did proceed.


  • Insolvency practitioners must be aware of the potential competition law hurdles that may need to be overcome when selling a company's assets or shares.
  • Obtaining ACCC clearance for an acquisition can take months and this timeframe may have a significant impact on any potential asset or share sale. While a quick sale may be preferred, it may not always be possible.
  • There are potentially significant penalties for a breach of section 50 of the Act, not just against those directly involved but also those aiding and abetting a breach. This could include insolvency practitioners.
  • When assessing the impact on competition in the market of the proposed acquisition, that market may be narrowly defined.
  • Advice should be sought for material acquisitions which could potentially impact upon competition and, if in doubt, an informal approach made to the ACCC to at least discuss the issue further.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.