Chalmers adds more complexity with new merger thresholds

Tie-ups with a value above $200m will need to be notified under proposed thresholds released for comment by Treasurer Jim Chalmers.

Federal Treasurer Jim Chalmers has proposed a dual market share/$200m monetary threshold for compulsory notification of mergers under his planned revamp of merger laws.

The second leg of the reforms, the proposed notification threshold, was released last week with comments due on September 20.

Clayton Utz competition partner Michael Corrigan attacked the proposals as “too complex, particularly when it comes to market share rules”.

Quay Law Partners Dave Poddar said: “Business needs to know when to file and the proposed changes are complex and ­confusing.

“The danger is, as when the law was first introduced 50 years ago, the ACCC will be swamped with applications which will overwhelm the agency.”

Australian Competition & Consumer Commission chief Gina Cass-Gottlieb has already criticised the first round of proposed merger amendments as being too complex in her address to the Law Council in Sydney last month.

One practitioner noted: “The competition laws are looking more like the tax Act with voluminous pages to cover some otherwise clear goals.”

Separately, the government has quietly launched a review of the National Competition Council to boost its role. Former Productivity Commission chief Peter Harris has argued merger laws are of only minor benefit in boosting competition, and that proactive reforms to, say, limit private toll road ownership have more impact. Former ACCC boss Rod Sims says you need both reforms.

The government split the proposed merger changes, with the first part – released in late July – proposing mandatory notification and giving the ACCC the first right of refusal on a deal, with mergers void unless cleared.

This contrasts with the US, where the competition agencies must seek court approval to block a merger.

Under the changes released late last week the threshold for notification involves several steps covering a broad range of circumstances. There is ministerial discretion to declare that some sectors must notify, no matter what deal value.

Notification is required where the merger parties have combined Australian turnover of more than $200m annually.

It is also compulsory when the acquirer has turnover of more than $500m and the target more than $10m, and the deal is worth more than $50m.

If the combined market share is 25 per cent and the combined turnover is more than $20m, the regulator must also be notified.

Another compulsory case is where the combined market share is 50 per cent and combined turnover is $10m.

A look through the alternatives suggests both international and Australian acquirers would be affected.

If the deal is not “suspected” of being anti-competitive then it will be cleared in at least 30 days – and under fast-track procedures, as little as 15 days.

But if the ACCC has any concerns, that process will take at least 90 days.

The ACCC has pushed for changes to merger rules, arguing that courts have overturned too many decisions, not all deals are notified, and new administrative arrangements would be simpler and faster.

The Business Council of Australia has disputed those claims.

Local software darling Canva has just acquired Leonardo AI without notifying the ACCC.

The ACCC is expected to soon release a statement clearing the deal, to avoid any further embarrassment.