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Mergers: Notification and authorisation

 

Overview

There are no mandatory pre-merger notification requirements in Australia's competition laws. However, parties to proposed mergers may:

  • notify the ACCC informally, following which the ACCC will indicate whether or not it will challenge or seek modifications to the merger; or
  • seek 'formal' approval of the merger' or
  • seek 'authorisation' for an otherwise anti-competitive merger on public benefit grounds.

Informal notification is the most common option. The 'formal' notification process has never been used and the authorisation process only rarely.

 

Informal notification

Parties to mergers having the potential to raise competition concerns generally 'informally' notify the ACCC of the merger and usually will not close during this time. The ACCC may

  • indicate it will not challenge the merger
  • indicate it will oppose the merger
  • indicate it will provide clearance subject to the provision of court enforceable undertakings designed to alleviate competition concerns.

Parties are assisted by the provision of Merger Guidelines, both for substantive analysis and procedure. The ACCC publishes public competition assessments for mergers which are opposed or are otherwise of public interest (see merger cases page).

If the ACCC indicates it will not challenge a merger this does not mean that a third party cannot challenge the merger; although third parties do not have the power to seek an injunction to prevent a merger, they may obtain remedies in relation to concluded mergers found to have contravened section 50.

 

Formal notification

To enable parties to obtain greater security a formal notification regime option was introduced in 2007. Clearance under the formal process will preclude third parties from subsequently challenging the merger. Clearance will be granted only if the ACCC does not believe the merger will SLC (s 95AN). This process has never been used.

 

Authorisation

Parties may seek authorisation for an acquisition pursuant to s 95AU of the CCA. This must occur before the acquisition takes place. It is currently the Australian Competition Tribunal and not the ACCC which has the power to grant authorisations in relation to mergers. The Tribunal must not grant authorisation unless it is satisfied that the acquisition is likely to result in such benefit to the public that it should be allowed (s 95AZH). The Tribunal must consider as benefits:

  • significant increase in the real value of exports
  • significant substitution of domestic products for imported goods
  • all matters relevant to the international competitiveness of any Australian industry

Other factors may also be considered.

There have been three applications for merger authorisation since 2007 (when the power to grant authorisation shifted from the ACCC to the Tribunal), one of which was withdrawn before a Tribunal decision; the other two applications (AGL/MacGen and Sea Swift/Toll) were successful in 2014 and 2016 respectively.

  1. Application by Murray Goulburn Co-Operative Co Limited for Merger Authorisation (withdrawn in 2013 before being heard).
  2. Application by AGL Energy Limited for merger authorisation (proposed acquisition of Macquarie Generation) (24 March 2014). On 25 June 2014 the Tribunal granted authorisation for the proposed acquisition.
  3. Application by Sea Swift Pty Limited for merger authorisation (proposed acquisition of certain Toll Marine Logistics assets) (made and withdrawn in 2015; new application 2016). On 1 July 2016 the Tribunal granted authorisation (subject to conditions)