Jim Chalmers waters down mergers overhaul following business backlash

The Treasurer’s decision follows industry concerns that the reforms were too complex, risked stifling investment and could kneecap deal-making activity.

Jim Chalmers will water down elements of Labor’s proposed mergers overhaul. Picture: NewsWire / Martin Ollman

Jim Chalmers has dumped a key pillar of Labor’s proposed laws to toughen the nation’s merger regime, abandoning plans to establish thresholds that would alert the competition watchdog of proposed takeover deals when businesses possessed a substantial market share.

Unveiling the changes in parliament on Thursday, the Treasurer will instead rely on proposed monetary thresholds, which if met would empower the Australian Competition & Consumer Commission to vet planned mergers and acquisitions before proceeding.

The watering down of the proposed merger reforms comes after the Business Council of Australia decried elements of the overhaul, arguing that their complexity risked stifling investment, diminishing competition and kneecapping deal-making activity.

In a speech to be delivered on Thursday, Dr Chalmers will say the overhauled settings “strike the right balance between creating a rigorous and robust regime without calling in every merger”.

“These thresholds will allow the ACCC to focus its efforts on the mergers that really matter,” he will say, according to draft excerpts of a speech obtained by The Australian.

Following a review of Australia’s voluntary merger notification rules, Dr Chalmers had previously proposed to set “market share thresholds” amid concerns that anti-competitive mergers were intensifying industry concentration and pushing up prices for consumers.

Those proposed changes, released for consultation by Treasury in August, required businesses to notify the ACCC of a planned merger if at least one of two criteria were met.

First, if the entities’ combined market share in their sector was 25 per cent or more and their combined domestic turnover was at least $20m; or second, if the entities’ combined market share was 50 per cent or more and their combined turnover was at least $10m.

Neither will be set, with Dr Chalmers instead planning to set three separate monetary thresholds to capture the approximately 1500 M&A transactions that occur each year.

First, the ACCC will be required to be notified of any deals where the merger parties have combined Australian turnover of more than $200m annually, and where the target being acquired has a domestic turnover above $50m or a global transaction value above $250m.

Second, notification will be compulsory when the acquirer has turnover of more than $500m and the target more than $10m.

Third, to ensure serial or so-called “creeping” mergers are reviewed, whereby large companies hoover up many small businesses, acquirers with turnover above $200m will be required to notify the ACCC when the cumulative turnover of their acquisitions “in the same or similar goods” is at least $50m over a three-year period.

Land acquisitions involving residential property development and certain commercial property acquisitions won’t be included unless they are by “additional targeted notification requirements”.

The legislation also enables the federal treasurer to adjust and calibrate the thresholds to respond to evidence-based concerns from the ACCC about “high-risk mergers”