Thresholds and process guidelines released for consultation 12 min read
March was a busy month for merger reform. With Treasury's release of the Ministerial instrument containing the notification thresholds and the ACCC's release of various process guidelines, we now have some long-awaited clarity on how the new merger regime will work. However, as we move closer to implementation, many key details remain under consultation.
In this Insight, we review the new notification thresholds and process guidelines, considering guidance from the Ministerial instrument as well as the following ACCC publications:
- Transition Guidance (updated 4 March 2025)
- Frequently Asked Questions about merger reform (updated 17 March 2025)
- Merger process guidelines (released for public consultation on 27 March 2025)
- Provisional guidance on criteria for long form notifications (updated 28 March 2025)
(together, ACCC Process Guidelines).
Key takeaways
- On 28 March 2025, Treasury released the Exposure Draft Competition and Consumer (Notification of Acquisitions) Determination 2025 (Draft Instrument) with submissions open until 2 May 2025. The Draft Instrument provides the criteria for when a transaction will require notification—it sets out the monetary and control thresholds, the meaning of an acquisition having a 'connection' to Australia, notification exemptions and the proposed form of notification.
- While the notification threshold values are largely as foreshadowed, there are new details about how the thresholds will apply (eg how to calculate turnover and in respect of which parties).
- Key details about when the ACCC will be able to grant a waiver are not yet available. The ACCC will consider the object of the CCA, the interests of consumers, the likelihood that the acquisition would meet the notification thresholds and the likelihood that the acquisition would, or would be likely to, substantially lessen competition. The ACCC will likely grant notification waivers within 20 business days.
- Pre-notification with the ACCC is encouraged at least two weeks before filing. Parties involved in acquisitions in concentrated markets, part of global transactions or that may require a remedy are encouraged to engage in early pre-notification.
- There will be a short-form and long-form notification, depending on the nature of the transaction. Both forms require parties to include organisational charts, financial information and transaction information. Long-form notifications will be required for horizontal, vertical or conglomerate acquisitions. Long-form notifications also require the production of a broader range of documents, including board documents and those relating to transaction rationale, the acquisition itself, the value of the target, competitive or market conditions and relevant product or service business plans.
How will the notification thresholds work?
An acquisition will require notification where:
- it meets the monetary thresholds;
- it involves an acquisition of control; and
- the target is 'connected with Australia',
unless an exemption to notification applies. Certain types of acquisitions must be notified regardless of the thresholds and, as the prohibition on transactions that substantially lessen competition will continue to apply, parties will still need to consider whether an acquisition raises competition concerns even if it is not notified.
The primary thresholds
As noted in the Draft Instrument, an acquisition in a target 'connected with Australia' (discussed further below), will be notifiable if it meets either of the following monetary notification thresholds:
- 'acquisitions resulting in large or larger corporate groups'; or
- 'acquisitions by very large corporate groups'.
| ACQUISITIONS 'RESULTING' IN LARGE OR LARGER CORPORATE GROUPS | ACQUISITIONS 'BY' VERY LARGE CORPORATE GROUPS |
|---|---|
|
|
Turnover will be calculated by reference to 'GST turnover' on the date of signing and should consider the GST turnover of any 'connected entities'.
There are two tests to determine whether an entity is a connected entity:
- an entity is a connected entity of another entity if the second entity is an associated entity of the first entity for the purposes of s50AAA of the Corporations Act 2001 (Cth) (the Act); and
- an entity is a connected entity of another entity if the first entity 'controls' the second entity for the purposes of s50AA of the Act (as modified by s51ABS(2) of the Act).
In addition, it has been clarified that the $50 million / $10 million turnover aspect of the thresholds now only relates to the target (rather than to at least two of the merger parties, as foreshadowed previously).
Creeping or serial acquisitions thresholds
The thresholds for creeping or serial acquisitions are largely as foreshadowed, but there are some new details.
| ACCUMULATED THRESHOLD BASED ON THE COMBINED AUSTRALIAN TURNOVER OF THE MERGER PARTIES | ACCUMULATED THRESHOLD BASED ON VERY LARGE CORPORATE GROUPS |
|---|---|
|
|
In essence, these thresholds require an aggregation of current turnover of the proposed target with the current turnover of 'previous' targets acquired over the last three years in the same industry. This includes previous targets acquired by a connected entity of the acquirer. Previous acquisitions that have been notified, where target turnover is less than $2 million or where the target is not connected with Australia, are excluded from the calculation of accumulated turnover. There is also an exemption to the serial or creeping acquisition threshold where the proposed target turnover is less than $2 million.
While the notification threshold takes into account only past acquisitions of the acquirer, the ACCC will consider previous acquisitions by both the acquirer and target as part of its substantive assessment. Both the proposed short- and long-form notifications request details about the merger parties' relevant past acquisitions.
Acquisition of shares in 'Chapter 6' entities, defined in s51ABJ of the Competition and Consumer Act 2010 (Cth) (CCA) as listed companies, unlisted companies of more than 50 members or a listed registered scheme, are not required to be notified unless the acquisition results in someone's voting power in the entity:
- increasing from 20% or below to more than 20%; or
- increasing further from a starting point that is above 20%.
Acquisition of shares in non-Chapter 6 entities (ie private companies, private managed investment schemes and unlisted companies with fewer than 50 members) are not required to be notified unless the acquisition results in the acquirer gaining 'control' of the target (and the monetary thresholds are met). 'Control' is defined in s50AA of the Act as having the capacity to determine the outcome of decisions about another company's financial and operating policies.
Treasury previously alluded to a potential requirement that acquisitions of 20% or more in an unlisted or private company (which met the monetary notification thresholds) be notified, however this is not contained in the Draft Instrument.
A share or asset is connected with Australia if the share is in a body corporate that carries on business in Australia, or the asset is used in, or forms part of, a business carried on in Australia.
Treasury is considering whether the 'connected with Australia' test should be expanded to include shares or assets in an entity that 'intends to carry on a business in Australia'. If it is expanded, this definition may capture transactions without a current nexus in Australia, eg where neither the acquirer nor target group has current market presence.
The merger legislation empowers the Minister to determine (for a period of five years) a class of acquisitions required to be notified. These determinations apply even if the acquisition does not meet the monetary thresholds or result in control. The Draft Instrument makes certain acquisitions of businesses and land by major supermarkets subject to notification in this way.
If a merger falls below the notification thresholds, the current 'substantial lessening of competition' test (under s50 of the CCA) will continue to apply. The ACCC encourages parties to notify mergers that are likely to substantially lessen competition even if they do not meet the notification thresholds.
The Draft Instrument includes exemptions to the notification thresholds, namely:
- acquisitions in insolvency processes by administrators, receivers, managers or liquidators, transfers of control due to inheritance, acquisitions by trustees or nominees and routine trading in financial securities are exempt from notification.
- however, any acquisitions from administrators, receivers, managers or liquidators are still subject to notification requirements.
- certain classes of land acquisitions are exempt, namely:
- acquisitions made for the purposes of developing residential premises;
- certain commercial property acquisitions by businesses primarily engaged in buying, selling or leasing land, where the acquisition is for a purpose other than operating a commercial business on the land; and
- extensions or renewals of a lease for land upon which a commercial business is currently being operated.
In relation to the land acquisitions exemption, the explanatory memorandum for the Draft Instrument clarifies that the exemption does not extend to any merger where land acquisition is a key component of the broader transaction, or where the land acquired is to be used and operated for commercial reasons.
What are the key aspects of the ACCC's process?
The ACCC envisions the pre-notification process can be used to raise any issues and discuss possible areas of focus to reduce the likelihood of extensive information requests and delay of the determination period. Parties involved in concentrated markets, global transactions or that may be required to provide a remedy are encouraged to engage in early pre-notification. As in overseas administrative regimes, we anticipate the ACCC will use this period to identify any possible areas of focus or points of concern and identify additional information that should be covered by the notification before it is formally filed.
Requests for pre-notification engagement will be made via the ACCC's online merger portal. Once submitted, the ACCC will endeavour to contact parties within five business days.
Parties can voluntarily seek a waiver from notification. If granted, notification will not be required. This provides some certainty to parties as to whether or not they need to notify.
In assessing waiver applications, the ACCC will consider the object of the CCA (ie to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection), the interests of consumers, the likelihood that the acquisition would meet the notification thresholds and the likelihood that the acquisition would, or would be likely to, substantially lessen competition.
Waiver applications will not be kept confidential and will be available on the ACCC's Acquisition Register to allow interested third parties to make submissions. The ACCC expects to make most waiver determinations within 20 business days of receiving a waiver application.
Additionally, if the parties notify the ACCC of the merger, there is an option for fast-track review under Phase 1, whereby the ACCC can approve acquisitions after 15 business days. The ACCC expects to approve approximately 80% of mergers in 15 to 20 business days via either Phase 1 or the notification waiver process.
Acquisitions that 'are notified' (including voluntarily) or 'required to be notified' will be 'stayed'. This means parties will contravene the CCA if the acquisition is 'put into effect' prior to the ACCC's merger determination.
The Draft Process Guidelines indicate that putting an acquisition 'into effect' does not necessarily require the full transfer of legal ownership. For instance, putting the acquisition 'into effect' may include pre-completion activities such as terminating employment of key employees, closing key facilities or integrating IT systems.
A party will not put the acquisition 'into effect' by merely entering into conditional acquisition agreements, such as those with condition precedents, including obtaining regulatory approval, until they become binding.
FIRB will continue to notify the ACCC of any foreign transactions that may raise competition concerns, as under the current regime.
There will be short and long notification forms (with the former to be used for acquisitions unlikely to raise competition concerns). Both forms will require the provision of certain documents up front, such as transaction documents, financial reports and organisational charts.
In addition, long-form notifications will also require the disclosure of additional documents, which may include board documents and those pertaining to transaction rationale, the acquisition itself, the value of the target, competitive or market conditions and relevant product or service business plans.
The ACCC has provided provisional guidance in relation to when parties should use the long-form notification:
- Horizontal acquisitions: where parties supply or potentially supply products or services in the same market, and the combined market share post-acquisition is:
- equal to or greater than 40% and the increment resulting from the acquisition is equal to or greater than 2%; or
- equal to or greater than 20% but less than 40% and the increment resulting from the acquisition is equal to or greater than 5%.
- Vertical acquisitions: where a party supplies products or services in a market that is upstream or downstream from a market in which another party to the acquisition supplies products or services; and
- the party active in the upstream market has an estimated market share equal to or greater than 30% and the other party has a downstream market share of equal to or greater than 5%; or
- the party active in the downstream market has an estimated market share equal to or greater than 30% and the other party has an upstream market share of equal to or greater than 5%.
- Conglomerate acquisitions: where the parties supply 'adjacent' products or services and one of the parties to the acquisition has an estimated market share equal to or greater than 30%.
- Other circumstances: the ACCC has suggested that use of the long form may be appropriate even where the above criteria are not met, particularly where:
- the merger involved a 'vigorous and effective competitor'.
- the merger involves the acquisition of a firm developing a significant product in a market where the parties potentially overlap.
- there is an acquisition of a firm that supplies or controls access to a significant input or asset, eg raw materials or intellectual property, or a firm with a significant user base.
Merger parties should be aware that, following ACCC approval, a transaction must not be completed until at least 14 calendar days have passed since the approval. This is to allow any interested parties to apply to the Competition Tribunal to review the ACCC's merger determination.
Given this, the earliest parties can complete an acquisition is around 29 days after an effective notification is made (noting the ACCC cannot make a decision earlier than 15 business days). Approvals will only be valid for 12 months.
A notifying party or third party may apply to the Tribunal for a limited merits review of an ACCC merger determination. An application for review must be made within 14 calendar days after the ACCC's reasons for determination are published on the Acquisitions Register.
The Tribunal must make its determination within 90 days after the later of the last day on which an application for review could have been made, or the day the applicant gives the Tribunal further information. The Tribunal may extend this period by 60 days once, for no reason, or by another 90 days once, if it is satisfied it will need more time to review relevant materials to the matter.
What are the transitional arrangements, and which regime should you use?
Key dates
The current informal regime will close on 31 December 2025
If your transaction is not cleared by the ACCC before 31 December 2025, the ACCC will discontinue its review and list the transaction on the public register as having ‘no decision.’ If parties do not receive ACCC informal clearance by 31 December 2025, they will need to re-notify under the new regime if the notification thresholds are satisfied, or if there is a potential competition concern per s50 of the CCA.
Informal review applications should be submitted by 30 September
ACCC guidance on transitional arrangements have indicated that any informal review applications submitted after 1 October 2025 are unlikely to be completed before the new regime takes effect.
Even then, there may be a risk that such a review is not concluded by 31 December 2025 when the informal regime ceases to operate, and parties may have to file again under the new regime.
Acquisitions approved between 1 July and 31 December 2025
Acquisitions approved under the informal regime between 1 July and 31 December 2025 will be exempt from filing under the new regime, provided completion occurs within 12 months. Otherwise, parties will need to lodge a new application under the mandatory regime if notification thresholds are satisfied. In such circumstances, the ACCC will rely upon information received under the informal regime to consider an application under the new regime more quickly.
Informal reviews cleared before 1 July 2025
Parties whose informal review applications are approved prior to 1 July 2025 must re-apply to the ACCC for an exemption letter from the new regime between 1 July 2025 and 31 December 2025 with updated market shares and information. The ACCC recommends that such a request be made between 1 July and 1 October 2025.
Filing voluntarily under the new regime from 1 July 2025 is encouraged
Due to the uncertainty that surrounds the volume of applications the ACCC will receive prior to the closure of the informal merger clearance regime, the ACCC is encouraging parties to voluntarily notify under the new regime from 1 July 2025.
Depending on when parties are contemplating an ACCC filing or engaging with the ACCC, the following chart may assist with decisions about which regime to use during the transitional period.
Which regime to use
Next steps
Treasury's consultation on the Draft Instrument is open until 2 May 2025.
The ACCC's public consultation on the Draft Process Guidelines is open until 17 April 2025. If you would like to discuss the Draft Guidelines, the impact they may have on your business and the steps you can take to prepare for the new merger regime, please get in touch with us.
We are preparing for the future of mergers in Australia. You can read our previous Insight for a detailed overview of the legal framework and key elements of the new merger regime, or download our practical summary here.
For more information on the ACCC's Draft Analytical Guidelines, please see our Insight.