Strategic considerations arising from Australia's new merger control regime

Australia's new merger control regime commenced on a voluntary basis on 1 July 2025 and comes into force on 1 January 2026. The new regime is a seismic shift from the current voluntary and informal process to a mandatory and suspensory process.

In short, Australian Competition and Consumer Commission (ACCC) merger review will become more rigid, more burdensome, often more protracted, and capture many more transactions. While the process changes are manifold, for general counsel, boards and c-suites there are a number of important issues which require careful consideration from a strategic and governance perspective.

Breadth of coverage

The new regime requires notification of types of transactions well beyond what is normally considered 'M&A'. It requires notification of any controlling interests in shares or unit trusts, or any legal or equitable interests in assets that exceed the monetary thresholds. Given the breadth of the primary obligations, there is then a patchwork of exceptions, including for various real estate transactions, insolvency situations, rights issues, buy-backs, underwriting, clearing and settlement facilities, nominees and other trustees, and acquisitions in the ordinary course of business.

However, the exceptions are narrow, technical and rarely cover the field. To take property development as an example: a developer's acquisition of a bare interest in real estate (whether directly or via a land entity or project delivery agreement) is covered by an exemption, as are lease extensions and renewals, but the sale or initial lease of property to a corporate buyer or lessee is not – and, although the buyer/lessee would be the primary party responsible for ACCC notification, vendors/lessors are exposed to penalties and the voiding of the transaction if a notification is missed. The consequence is that many businesses require compliance systems to identify potential notification obligations (even on the 'sell-side').

Complexity of notification thresholds

The new notification thresholds are low and will inevitably capture many more transactions than the old regime, including transactions that raise no substantive competition issues. Assessing notifiability can also be very complex and require a careful assessment of corporate group structures, precise attribution of Australian revenues to entities and assets, and records of historical acquisitions on a three-year lookback.

For regular acquirers and large corporates, having well-developed views on group structure and the applicability of relevant exceptions, and internal systems and processes that capture relevant information on a rolling basis, are essential to make quick, accurate and consistent decisions.

International reach

The new regime is also broad in terms of its geographic reach. It applies a very thin jurisdictional nexus that requires only that the target is 'carrying on business' in Australia – a threshold that can, in particular circumstances, be satisfied where the target has for example customers, users or suppliers in Australia. Particularly having regard to a low A$250 million global transaction value secondary threshold, the new regime will capture many offshore deals where the target has minimal activities, and perhaps no physical presence, in Australia.

Document hygiene

The new process represents a step-change in transparency over board documents. In complex transactions, both parties must produce two years of documents 'prepared by or for or received by the board or a board committee' (or equivalent body, such as an Investment Committee) that relate to the transaction or assess the competitive conditions or business plans regarding the relevant goods or services. Those documents are often highly probative and impactful in ACCC mergers reviews.

There is also no limit on the ACCC's internal use or retention of documents, so board documents produced by merger parties may also be reviewed by other ACCC teams (e.g. for enforcement purposes). A range of mitigation measures should be considered to avoid producing irrelevant but sensitive documents to the ACCC, protect legal privilege, and manage risks of poorly considered or loosely expressed documents adversely impacting ACCC reviews.

Transparency

Whereas under the old regime over 90% of notifications were cleared on a confidential basis, under the new regime, there is no confidential ACCC review process available and the ACCC must place filings on its website within a day of notification. As well as demanding earlier announcement of transactions, this also provides much greater opportunities for competitors, customers, unions, lobby groups and other interested stakeholders to engage with the ACCC to seek to disrupt transactions.

Risk shifting and allocation

The new regime tends to shift more regulatory risk onto sellers. This arises both because of the need for more deals to be conditional upon ACCC clearance, and because the ACCC is no longer able to review multiple shortlisted bidders or provide confidential clearances. As a result, sellers will need to proceed to signing conditional documents and announcing the deal with no or limited substantive engagement with the ACCC. Sellers are increasingly likely to look to risk allocation mechanisms such as reverse break fees, non-refundable deposits, pre-commitments to specific divestitures and 'hell or high water' provisions.

On the buy-side, we anticipate that bidders will be seeking increased access to information from sellers (including financial and market information and board materials), which will require enhanced competition law protocols. For both sides, robust and reliable advice on substantive competition issues affecting execution risk, reviewing time and remedies is more important than ever.

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.

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