Australia has enacted the most significant amendment to competition law since the passage of the original 1974 legislation, now known as the Australian Competition and Consumer Act 2010 (Act).

From 1 January 2026, it will be compulsory to notify certain mergers that occur with a connection to Australia.

The transition to the new regime has already started, so it’s important that businesses prepare for the change now.

In this article we’ll explain:

• What is changing
• What needs to be notified
• What the consequences are of failing to notify
• What businesses need to start doing differently

What is changing?

Under the new notification regime, the Australian Competition and Consumer Commission (Commission) acquires significant administrative powers. Parties can expect a more rigorous, data-driven approach to merger analysis, especially given the obligation to now provide written reasons for decisions.

• The regime changes from a voluntary, judicial enforcement model to a mandatory, administrative model. The Commission itself makes the decision in relation to notified acquisitions.
• Notification of proposed acquisitions becomes compulsory.
• Parties are required to answer questions and provide documents.
• The Commission has general powers to seek information and documents from third parties, including customers, suppliers and competitors.
• Decisions around mergers are based on the documentation and data provided to the Commission.

The blending of legal and economic principles under the new regime means that corporations and their advisors must think like both a regulator and an economist. It will also influence corporate decision-making, due to the obligation to produce the required data and documents.

Decisions will be made by the Commission in two phases:

• Phase 1: This includes a determination of whether the merger can be put into effect (with or without conditions).
• Phase 2: If unacceptable conditions are imposed or it is determined the acquisition cannot proceed, a more detailed examination must occur. The Commission must express its competition concerns.

What needs to be notified?

Types of acquisitions

The regime applies to acquisitions, including acquisitions of shares or voting power in a corporation.

• Shares which result in control within the meaning of s. 50AA Corporations Law.
• Voting power if as a result of the acquisition it increases:
  • from 20% or below to more than 20%;
  • from a starting point that is above 20% to up to 100%.
• Conditional contracts, if the provision has become binding.
• Schemes: there is an exemption but this does not apply if the purpose of the scheme is to obtain control.
• Surprise hostile takeovers have special provisions that require notification but allows the Commission to not make the bid public, subject to certain conditions.

Thresholds

Criteria for notification are to be set by regulations or Ministerial determination. There will be:

• monetary thresholds;
• market concentration thresholds; and
• targeted notification thresholds.

The cumulative effect of acquisitions must also be considered. All acquisitions within the previous three years by the acquirer will be aggregated. This has become a focus for a series of smaller acquisitions, often by private equity providers who eventually might ‘roll up’ those acquisitions into a single larger entity.

Targeted notifications

The Treasury Minister has the power to provide for targeted notification requirements. Those targeted thresholds can be made by reference to a wide range of factors familiar in competition assessment of mergers. However, this power extends to the identification of a specific ‘business’, whether or not the field of operation of that business constitutes a ‘market’ in competition law terms. There is, for example, a general power to set a merger notification threshold by reference to ‘any assets of a person’.

Currently, the only designated businesses are supermarket groups – Coles Group Limited and connected entities, and Woolworths Group Limited and connected entities and ‘land for supermarket businesses’.

Exceptions to notification requirements

These cover certain land acquisitions, circumstances where an administrator, receiver and manager or liquidator acquire land, succession, financial securities, money lending and financial accommodation, nominees or other trustees, and exchange directives.

What are the consequences of failing to notify?

The new regime will add significant costs and times to the merger process. However, failure to notify when it must be done will have serious consequences for the validity of any transaction, as well as possible criminal liability.

The crucial concept is ‘an effective notification date’. Without one, the acquisition may not proceed. Serious consequences follow.

• It is an offence if a notifiable transaction is not notified or the Commission is not notified of a material change of fact.
• Acquisitions are ‘stayed’ until there is an effective notification date.
• It is an offence if conditions imposed are not complied with.
• Acquisitions are void if put into effect while stayed.

What businesses need to start doing differently

Parties considering possible acquisitions should build into their decision process the reason (purpose) for the proposal. They should think as the economist or regulator thinks, asking about the benefits that flow to the market, not just themselves. They should concentrate on how acquisitions lead to:

• efficiencies or benefits such as innovation, product expansion, or consumer choice; and
• overcoming market defects, such as lack of scale to be able to produce at lowest efficient cost, market failure, or the need for international access to markets.

Removing another competitor is not a good reason.

1. Answer the ‘Why’ question: Be prepared to explain why you want the acquisition to proceed.
2. Control the documentation process: Extensive documentation is always required by the Commission even in a short form notice. Have a structured and careful program for managing the merger process and its documentation before the notification is made. Documents can be sought from previous years, and the Commission is able to access previous notifications to test consistency of claims made. Legal professional privilege will rarely apply to any such documents.
3. Notification: Ensure from the start there is a complete notification application. Be proactive in dealing with the Commission and identifying the ‘remedies’ that might resolve any concerns of the Commission.

There are two alternative Forms for lodging a merger notification. Both those forms seek extensive information.

• The short form: Is given if the Commission thinks the acquisition unlikely to raise competition concerns. The requests in this form are not beyond what might be now expected to be provided to the Commission.
• The long form: Is for all others, not differentiating the more complex from straightforward notifications. The long form requires detailed information, sometimes going back three years, about the economic analysis of markets. The long form contains requests for data which is essentially economic in nature and requires considerable work to obtain. It also requires disclosure of the plans made by the acquiring party post-acquisition.

In our view, the long form is the central issue boards and their advisors will need to deal with. Answering the ‘Why’ question will be key.