Australian M&A enters a new merger review era
Australian M&A enters a new merger review era
This article was originally published on 9 January 2025 and updated on 10 December 2025.
Background
On 27 March 2025, the ACCC released guidance on how it will assess acquisitions under the new merger regime and on 28 November 2024, the Treasury Laws Amendment (Mergers and Acquisitions Reform) Act 2024 was passed by Parliament.
This represents the most substantial reform to merger laws in more than 50 years, moving from a voluntary, informal review process to a mandatory and suspensory notification regime.
Key changes include:
- Mandatory notification thresholds based on transaction values and turnover
- Prohibitions from proceeding with notifiable mergers until clearance from the Australian Competition and Consumer Commission (ACCC) is received
- Significant penalties for non-compliance with mandatory notifications
- A public register of all notifiable Mergers & Acquisitions (M&A)
- Pre-determined timeframes for ACCC reviews
- Enabling the ACCC to review any merger within a ‘high-risk’ industry.
The regime applies to transactions ‘put into effect’ after 1 January 2026. This means agreements entered into during 2025 will be subject to the new laws where completion occurs in 2026. In these cases, transitional arrangements have allowed parties to ‘opt-in’ to the new regime from 1 July 2025 onwards.
For mid-market businesses, these changes will be especially significant, and careful consideration will be critical to ensure continued growth and market competitiveness for parties who are considering acquisitions and divestments in the future.
Exploring the key changes in the legislation
Under the new regime, any acquisition of shares or assets that meet the thresholds below must be notified to the ACCC and cannot be completed until the ACCC provides clearance.
Failure to comply with these requirements will mean the transaction is void and may result in penalties of up to $50 million, three times the benefit of the illegal conduct, or 30 per cent of the Australian group turnover.
Monetary thresholds
The ACCC has set out thresholds for three general circumstances in which a notification must be made. All figures in AUD.
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Economy-wide |
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Very large acquirers |
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Serial acquirers |
For medium-to-large sized mergers |
For very large acquirers |
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Note: Where the acquisition is a ‘small acquisition’, these will be excluded from the new regime.
Key definitions:
Australian turnover: An entity’s Australian turnover is the amount of the entity’s gross revenue, determined in accordance with Accounting Standards, for its most recent twelve-month financial reporting period, attributable to transactions or assets within Australia, or transactions into Australia.
Connected entities: A 'connected entity' is a 'related entity' as referred to in section 4A of the Act (subsidiary, holding and related bodies corporate), or an entity that is controlled by, controls, or is under common control with the first entity, for the purposes of section 50AA of the Corporations Act 2001 (Cth).
Small acquisition: Where the Australian turnover of the target (and its connected entities) is less than $2 million.
Connection to Australia
In order to be notifiable, an acquisition must first be 'connected to Australia', meaning that:
- In relation to the acquisition of shares or other interests in a body corporate, the body corporate carries on a business in Australia or;
- In relation to the acquisition of assets, the assets are used in, or form part of, a business carried on in Australia.
Three-year look back test for serial acquirers
The three-year cumulative test set out in the table above for serial acquirers means that once an acquirer group meets the cumulative threshold test in a given three-year period, every additional transaction over $2 million that the acquirer makes in the same or substitutable sector will need to be notified to the ACCC during that three-year period.
Further, when the ACCC is considering a proposed transaction, it will have the ability to aggregate the effect of that particular transaction with the effect of all other acquisitions by the acquirer where the target was involved in the supply of the same or substitutable goods or services (disregarding any geographical factors or limitations) in the previous three years.
This will have significant implications for parties in the process of, or proposing to, roll up several smaller targets in an industry as part of an inorganic growth strategy, including private equity funds.
Expanded interpretation for ‘substantial lessening of competition’ test
The ACCC will be able to block an acquisition if it’s satisfied that the acquisition would have the effect or be likely to have the effect of substantially lessening competition in any market.
The regime also provides that an acquisition may substantially lessen competition in a market if it would, in all the circumstances, create, strengthen or entrench a substantial degree of power in the market, even if the change is not, itself, substantial.
Accordingly, for parties planning to implement smaller transactions that do not trigger the notification thresholds but raise potential competition law concerns, it may be prudent to notify such transactions under the new regime voluntarily.
ACCC review process
The ACCC will be subject to statutory time limits for its review process, which follows a phased approach. For more complex transactions, parties are to meet with the ACCC to explain the deal and negotiate information requirements before the timeline officially starts. For more complex transactions, parties are to meet with the ACCC to explain the deal and negotiate information requirements before the timeline officially starts.
Additionally, the ACCC can 'stop the clock' until it receives all the required information, meaning clearances are expected to take longer and cost more. This statutory deadline is a significant shift from the current flexible timeframes for reviews in the informal regime.
How can you prepare for the reform?
To prepare for the regime, we suggest leaders should:
- Prepare early for transactions: Businesses should start preparing as early as possible with the ACCC encouraging parties undertaking a notifiable acquisition to engage with the ACCC early via a pre-notification engagement. Early engagement will help businesses understand the new processes and avoid delays when the regime becomes mandatory.
- Stay informed about sector-specific risks: The laws will allow the Treasurer to designate high-risk sectors and impose specific notification thresholds for those areas. Mid-market businesses should monitor developments in their industry to assess whether they fall under these thresholds. Awareness of these changes will help businesses plan their merger strategies accordingly.
- Leverage accelerated approval timelines: The reformed merger regime aims to streamline the approval process for non-contentious mergers. Mid-market companies should consider how these faster approval pathways might benefit their M&A strategies, especially when seeking to merge with or acquire complementary businesses. This could result in more timely and predictable outcomes for mid-market transactions.
- Understand the importance of transparency: With the ACCC now required to publish reasons for all final merger decisions, mid-market businesses can gain more insight into the regulatory approval processes. This transparency will allow businesses to better understand ACCC’s decision-making criteria and help them refine their approaches to M&A planning.
- Conduct comprehensive due diligence: With the introduction of mandatory notification, businesses must be prepared for a thorough review of their acquisitions. Comprehensive due diligence will be crucial in ensuring that proposed transactions do not raise red flags with the ACCC. By understanding the full competitive landscape and potential regulatory concerns, businesses can reduce the risk of delays or rejections.
How can BDO help?
The merger regulatory landscape is evolving and understanding the implications is essential for informed decision-making. BDO can help you stay up to date and identify opportunities in a more competitive market.
Subscribe to BDO Insights for the latest updates or connect with our deal advisory experts to learn more about how these changes could impact your next transaction.
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