Proposed refinements to mandatory merger control regime address widespread criticisms

On 2 July, in response to criticisms of Australia’s mandatory merger control regime, proposed amendments were introduced to the merger control provisions of the Competition and Consumer Act 2010 (Cth), included in a schedule to the Treasury Laws Amendment (Strengthening Accountability for Tax Adviser Misconduct and Other Measures) Bill 2026 (Bill).

The key changes involve:

• replacing the automatic voiding of acquisitions that are required to be notified but complete without notification with a Court-supervised ‘voidable’ model;
• clarifying the ‘control’ exemption and narrow the definition of ‘associate’, reducing the capture of benign minority acquisitions and bringing Australia closer to the European ‘joint control’ model; and;
• allowing parties to seek extensions of Australian Competition and Consumer Commission (ACCC) approvals before they become ‘stale’ at the 12-month mark.

LSJ Online spoke to Felicity McMahon, Partner at Allens, about the key changes and what this means in practice.

McMahon operates in the Competition, Consumer & Regulatory team. She practises in all aspects of competition law including advising clients on mergers, investigations & enforcement, ACCC market studies and inquiries and Australian Consumer Law, while also delivering mergers lectures in the University of Sydney’s Postgraduate Competition Law subject.

McMahon has advised on a number of significant mergers and joint ventures in recent years, including advising Westpac on its sale of BT Private Portfolio Management in 2023, and Whitehaven Coal Limited’s acquisition of the Daunia and Blackwater mines from BHP Group and Mitsubishi Development Pty Ltd in 2024.

She has described the present regime as akin to “using a sledgehammer to crack a nut”.

McMahon says, “The regime is the broadest and most prescriptive in the world as it applies to acquisitions of assets and shares, not just businesses, and the thresholds are very low, with a very low threshold for nexus thereby capturing a range of benign transactions. Getting the concept of control right from the beginning, as well as establishing a reasonable de minimis monetary threshold would have made the regime better calibrated.” 

Automatic void no longer results from non-notification

The Bill has put forward changes to the automatic consequences of not notifying the ACCC of acquisitions. The introduction of automatic voiding was one of the most frustrating elements of the regime, along with a control test that took an expansive approach to defining ‘associates’. Both have been addressed in the Bill, positioning Australia’s merger regime to be much more aligned with international standards. Automatic voiding still applies where valid approvals have not been granted to notified transactions that have then been implemented.

McMahon says, “The amendments are definitely a step in the right direction, however, the voting power thresholds still capture transactions where an acquirer can have limited influence over the target.”

Considering that the ACCC sees more mergers per year than the European Commission, there is inevitably high demand upon the ACCC to respond to all notifications in a timely, effective manner to ensure that if there are any problems there’s no delay in alerting parties.

McMahon says, “We understand that the ACCC has invested a lot in ensuring it can review the notifications in a timely manner and its statistics show that it is working hard to achieve timely approval statistics.”

However, there is a still a question whether this is an appropriate response and whether the thresholds are properly calibrated.

“We would say they are still too broad, and too low, and therefore capturing benign transactions,” she says. “On timing, one of the sticking points is the requirement for parties to wait 14 calendar days after ACCC clearance to close, which requires parties to phone the tribunal to confirm no appeals have been lodged. In global transactions this means Australia is often holding up the deal from closing.”

The automatic void, as it stands under law at present, means that a non-notified acquisition that is put into effect is automatically void, irrespective of whether the failure to notify was intentional or not, and despite the potential of any substantive anticompetitive effects. The explanatory memorandum justified amendments in recognition that this “may have widespread unintended consequences in relation to non-notified acquisitions”.

Understandably, a raft of ‘just in case’ filings ensued for cross-border deals, with parties concerned that the validity of a global transaction may balance upon a disputable requirement for notification and the resulting analysis.

The Bill proposes that:

• upon application by the ACCC, the Federal Court must declare a non-notified acquisition that has been put into effect void unless the Court believes it is undesirable to do so, for example where voiding would cause significant harm to innocent third parties or the vendor has since been wound up;
• upon the ACCC’s application, the Court may make other orders such as requiring divestiture, and any affected party may apply for orders dealing with the consequences of a voiding order (for example, employee arrangements);
• applications must be made within six years of the acquisition being put into effect;
• under a new s77F, the Court may grant injunctions while the ACCC investigates or pursues a voiding application, including to pause integration, preserve target assets and prevent on-sale – with no undertaking as to damages required;
• only the ACCC can apply for a voiding order. Third parties applying for consequential orders must provide a copy to the ACCC, who may intervene. These orders may be made where the court considers them desirable to give effect to a voiding order or to deal with its consequences.

Whether the acquisition would significantly lessen competition or result in public benefits must not affect the Court’s decision as to whether to void a non-notified acquisition. This is ostensibly to ensure that the ACCC is the primary decision-maker and to prevent parties from deliberately not providing notification to have the Federal Court run the competition assessment instead.

These changes will not be retrospective, so acquisitions that are already void remain so, although parties will retain the ability to make applications to deal with the consequences of the automatic voiding of those acquisitions.

The clarity over what the thresholds for needing to notify and receive approval from the ACCC is not crystal.

McMahon warns, “The devil is often in the detail. They are very complicated thresholds, requiring examination of the turnover applicable for each party, the value of the transaction, as well as the value of revenue of past acquisitions.”

She explains, “When the transaction value threshold is satisfied, which is $250 million, a filing is required if acquirer has turnover in Australia exceeding $200 million, even if target has a very limited presence, provided it is carrying on business. Establishing a de minimis for these types of transactions to exclude a large number of non-issue transactions would be welcome.” 

Considering the additional administration requirements, merger deals – including the engagement of lawyers – are set to be a much costlier process for all parties.

McMahon says, “There is no question that this is resulting in more costs for merger parties through a combination of legal fees, as well as ACCC filing fees, often exceeding legal fees, and timing costs.”

Failing to notify remains a risky proposition

Completing non-notified acquisitions may still attract substantial civil penalties, and will result in automatic voiding in particular circumstances. Automatic voiding will still occur when completing while a notification is still under review (‘gun-jumping’), after the ACCC has blocked the deal, or on a ‘stale’ clearance.

Inadvertent ‘gun jumping’ remains a penalty risk of up to $100 million per infringement for corporations, 30 per cent of turnover, or three times the benefit value; and up to $2.5 million for individuals. Early implementation of a notified transaction carries even higher consequences, though, as those remain automatically void.

The reality of the proposed amendments is that an incorrect or deliberate, strategic decision not to notify no longer results in the invalidity of the transaction itself. Rather, under court supervision, penalties and remedies are available, providing a more predictable risk that can be planned for, budgeted for, and managed. Once the ACCC applies to the court, voiding remains the default order so there is incentive for parties to follow the notification procedures comprehensively.

The current regime is leaving parties in a grey zone as far as whether a completed notification was notifiable or otherwise, hence void, and the next steps in such a scenario. The proposed introduction of court supervision of the voiding process, and its ability to make related orders (e.g. requiring divestiture), clarifies the process for responding to transaction voiding.

This is a welcome change for third parties who deal with shares or assets in the acquisition of which was not previously notified to the ACCC. While counterparties, financiers and employees are currently exposed to the consequences of a transaction’s invalidity that they have no means to detect, under the proposed changes, the court-supervised model provides for tailored orders that address the concerns of third parties who acted in good faith, as opposed to a blanket unwinding.

The Bill is an interim measure before an annual review

The Bill primarily offers fixes to procedural elements of the regime, addressing clarity over consequences of non-notification rather than addressing the breadth of the regime. The regime has favoured risk-aversion over enhanced efficiency for transactions with low monetary thresholds and no plausible competitive effects.

A 12-month review by Treasury may further refine the regime.

Despite Treasury’s expectation of between 300 and 500 notifications per year, the volumes are likely to outnumber this range considerably. In only the first six months of the current regime, over 400 filings were received by the ACCC. The majority – at over 60 per cent of filings – were notification waivers (of which 95 per cent were approved).

On 9 April, the ACCC announced the new merger control regime “is working as expected”. It claimed that the average time taken to approve a notification in phase 1 was 18 business days, while waivers for acquisitions that clearly do not raise material competition concerns were decided in 11 business days on average.

The ACCC publishes details of each notification and key decisions on the Acquisitions Register. The ACCC is required to make a decision in 15 to 30 business days in Phase 1, subject to any extensions, to either approve the acquisition or decide that further review in Phase 2 is necessary.

The ACCC can decide a Phase 2 review is necessary if the ACCC is satisfied that the acquisition could be likely to have the effect of substantially lessening competition in any market.

The Phase 2 period is up to 90 business days, unless extended under specific circumstances.

In a media statement, ACCC Chair Gina Cass-Gottlieb said: “Increased transparency is an important feature of the new regime, allowing stakeholders to see the acquisitions coming to the ACCC and the ACCC’s reasoning. We remain focussed on administering the new regime transparently and efficiently and we will continue to report on our performance and the key trends as the regime beds down.”