After one quarter of the new mandatory ACCC notification regime, what is the good, the bad and the ugly for financial sponsors?
From 1 January 2026, certain transactions above specified monetary thresholds must be notified to the ACCC, regardless of whether or not the transaction is likely to have any impact on competition. These thresholds are likely to capture many acquisitions by financial sponsors.
The Government’s objective was to create a “faster, stronger, simpler, more targeted and more transparent” merger control regime but not all of those objectives have been met. For financial sponsors, while the new regime is stronger and more transparent, it’s not faster, simpler, or more targeted.
The good
90 percent of notifications and waivers are being cleared within 20 business days
The ACCC set a target of clearing “80% of acquisitions within 20 business days” and so far, the ACCC is meeting this target. As at 31 March, the ACCC has cleared or waived 161 acquisitions, with clearances being granted on average within 18 business days, while waivers have been granted on average within 11 business days.
However, these timeframes disguise that many acquisitions also require weeks or months of pre-filing engagement with the ACCC. As a result, the overall time to get ACCC clearance for many acquisitions is likely to be much longer than the current 18 business day average.
Greater certainty on when ACCC notification is required (although no such certainty for when ACCC notification is not required)
For most financial sponsors, confirming that ACCC notification is required will be a quick and simple exercise. For example, if the financial sponsor has more than $500 million Australian revenue across all connected entities (eg., controlled portfolio companies across all funds), any acquisition of a company with more than $10 million will satisfy the monetary thresholds.
However, due to the devilishly complex and labyrinthine serial acquisition thresholds (see below), reaching a firm conclusion that acquisitions below these thresholds do not need to be notified to the ACCC is complicated and burdensome.
The Government and the ACCC have been constructively engaging with key stakeholders
Both Treasury and the ACCC have extensively consulted on the design and implementation of the new regime. In particular, Treasury should be commended for fixing key issues in the original legislation, including re-introducing an ordinary course of business exemption for land transactions and simplifying the notification thresholds for asset acquisitions. The ACCC should be commended for providing clear and practical guidance in its FAQ section on its website, as well as its commitment to working with merger parties and lawyers to find pragmatic ways to navigate the new processes.
However, significant changes are still required if the regime is going to achieve the Government’s stated objectives.
The bad
Large global transactions of targets with minimal presence in Australia caught
A significant issue for financial sponsors is that acquisitions of foreign companies can require ACCC clearance even when those companies have a negligible presence in Australia and there is no prospect of any impact on competition. This is because any transaction that has a global transaction value of more than $250 million needs to be notified to the ACCC if the shares or assets being acquired satisfy a connected to Australia test. But that test is broad with no quantifiable revenue or asset thresholds, or de minimis exceptions. And so, an acquisition of a European company with less than $1 million in Australian revenue may need to be notified to the ACCC.
Focus on form over substance
There are now prescribed forms for ACCC notification. However, they are not well designed for transactions involving financial sponsors (particularly the information requirements around connected entities). While the ACCC has been endeavoring to take a pragmatic approach to how it applies a one-size-fits-all form to the plethora of different transactions that now require ACCC notification, in many circumstances, pre-notification engagement with the ACCC has resulted in undue focus on whether technical and prescriptive information requirements in the filing form have been met, instead of focusing on the substantive issues of whether the transaction will impact competition.
The ugly
Cryptic crossword approach to notification thresholds
Justice Wigney infamously said that Australia’s cartel laws appear to have been drafted as if the task were akin to producing a cryptic crossword – and the new ACCC regime has been drafted in the same way. The fatal flaw in the design of the new ACCC regime is that it captures almost all transactions and then has a series of technical, prolix and convoluted exemptions and carve outs (and exemptions and carve outs to the exemptions and carve outs).
For financial sponsors, this issue is most acute when it comes to applying the serial acquisition thresholds. These thresholds require financial sponsors to aggregate the revenue of all businesses acquired in the previous three years (but excluding any businesses that don’t compete with the assets/shares proposed to be acquired and excluding previous acquisitions that fall within the scope of one of the exemptions). This assessment is complex and slow, leading to uncertainty, cautious advice and waiver applications if there is uncertainty (particularly given the consequences for failing to notify are that the transaction is void).
Failure to notify means the transaction is automatically void
Transactions that require ACCC clearance and complete without it are automatically void. Practically this is unworkable, as it means the transaction is taken at law to never have occurred, even though in reality the acquirer now has possession of the shares/assets and may have integrated them into their own business.
Divergence from standard international merger control concepts
A key justification for the introduction of the mandatory ACCC notification regime was that it would bring Australia into line with other global jurisdictions that have similar regimes. However, rather than aligning the filing trigger for share/unit trust acquisitions with the EU concepts of control and joint control (which are used in many jurisdictions and relatively well understood), the ACCC regime has introduced a new concept of joint control with an “associate” based on public M&A concepts that are not readily suited to private M&A or merger control.
This has introduced uncertainty into the new regime and means that Australia remains an outlier when it comes to the assessment of the types of minority acquisition that require merger clearance.
