Yes. There are two in Australia - for competition issues, the Australian Competition and Consumer Commission ("ACCC") and for foreign investors, the Foreign Investment Review Board ("FIRB"). The ACCC is an independent Commonwealth statutory authority. FIRB is a non-statutory body that reviews foreign investment applications and advises the Treasurer on national interest implications.

The role of the ACCC

An acquisition of shares or assets is prohibited if the acquisition is likely to have the effect of substantially lessening competition in any Australian market (Section 50 of the Competition and Consumer Act ("CCA")). The ACCC is responsible for enforcing compliance with s50 (see "Identify the applicable national regulatory agency/agencies" below).

For parties considering the powers of the ACCC, there are two alternate paths for clearance of a transaction discussed below. These are optional as there is no mandatory filing regime with the ACCC.

If a foreign investor proposes to make an acquisition of Australian assets or shares and FIRB has jurisdiction then a FIRB filing may be mandatory - see monetary thresholds below. All FIRB filings will also be notified to the ACCC and reviewed by the ACCC. FIRB will not give its approval until the ACCC confirms that the transaction has no competition concerns.

• Informal Merger Clearance: The ACCC has a voluntary informal clearance process under which reviews the potential competitive effects of a proposed transaction in accordance with Informal Merger Review Process Guidelines. Under that process, the ACCC may conduct a confidential review by 'pre-assessment of transactions which do not raise significant competition issues or concerns in the Australian market. For more complex transactions that raise competition issues the ACCC may open a public consultation (known as "market inquiries") and receive information from the transaction parties and third parties under a public review, before coming to a view on whether the proposed transaction will result, or likely result, in a substantial lessening of competition. If the ACCC considers that the proposed transaction will not have that result, it will grant "informal clearance" and issue a letter advising that it will not oppose the transaction.

If the ACCC identifies competition concerns it will notify the parties and request undertakings that they do not complete the transaction. The ACCC may not prohibit a transaction itself but may approach the Federal Court of Australia for an interim injunction if the ACCC is concerned the parties may seek to complete a transaction that has not been cleared by the ACCC. In 2021, parties to a merger sought to complete their transaction even though the ACCC had not completed its informal review. The ACCC sought and was granted, an interlocutory injunction from the Federal Court of Australia to restrain the parties from completing the merger until proceedings brought by the ACCC were finalized, or the Federal Court of Australia made other orders. Following that, the merger parties decided to discontinue the merger entirely.

• Merger Authorisation: Merger parties may also choose to apply to the ACCC for authorization of a proposed transaction which, if granted, will provide the merger parties with immunity against any ACCC or third-party action for contravention of Section 50 of the CCA.

The ACCC will grant authorization where it is satisfied that the public benefits of the proposed transaction outweigh any lessening of competition. Informal merger clearance is the most popular process for obtaining merger clearance in Australia.

For foreign investment approval, FIRB is the agency, and foreign investment is regulated by a framework that includes the Foreign Acquisitions and Takeovers Act 1975 (Cth) ("FATA"), the Foreign Acquisitions and Takeovers Regulation 2015 (Cth) (the "Regulation") and the Federal Government’s Foreign Investment Policy. 

For competition matters, the ACCC is the primary agency and is also responsible for providing competition clearances or authorizations for mergers and acquisitions. The ACCC's role is to determine whether to grant or refuse merger clearances under its informal merger clearance process or to grant authorization under its merger authorization process.

The Federal Court of Australia deals with legal proceedings in connection with competition and consumer matters. While the ACCC may oppose a merger or acquisition, it may only prevent a transaction from completing via enforcement proceedings in the Federal Court of Australia in the course of which it may seek an injunction preventing the transaction from closing, and/or penalties if the transaction has already closed.

The Australian Competition Tribunal ("Tribunal") hears applications for review of determinations of the ACCC granting or revoking merger authorizations.

No, the ACCC is a federal agency that has jurisdiction in all of the Australian states and territories.

As the notification of mergers and acquisitions to the ACCC is, currently (see above regarding proposed reforms to the merger regime), voluntary in Australia (see further our response to "What are the relevant thresholds for notification?"), There are no mandatory pre-merger notification requirements enforced by the ACCC; however, there are mandatory filing requirements enforced by the FIRB (see below). The ACCC's Merger Guidelines state that parties are encouraged to approach the ACCC for clearance where:

• the products of the merger parties are either substitutes or complements; and 
• the merged firm will have a post-merger market share of greater than 20 percent in the relevant Australian market/s.

The filing requirements where informal clearance is sought from the ACCC are set out in the Informal Merger Review Process Guidelines.

FIRB Requirements

The foreign investment legislation applies to investment proposals by "foreign persons", which includes "foreign government investors" (FGIs). Broadly speaking, the regime regulates acquisitions by "foreign persons" of Australian entities, businesses and land. The foreign investment rules apply more strictly to a person who is an FGI so that a much broader range of transactions require approval than is the case for non-FGIs.

A "foreign person" includes:

• a non-resident individual;
• a corporation in which:
  • a non-resident individual, foreign corporation or foreign government holds a substantial interest (20% or more); or
  • two or more persons, each of whom is a non-resident individual, foreign corporation or foreign government, hold an aggregate substantial interest (40% or more); and
• a foreign government.

In many cases, a foreign person will only need to notify the Treasurer of their investment if the investment meets certain monetary thresholds.  The thresholds depend on the type of investor and the action proposed to be taken by that investor.

The monetary threshold investment amounts listed in the below table apply to nonland acquisitions and different thresholds apply to land acquisitions (these are not addressed in this guide).  The thresholds provided below which apply to nonland acquisitions are current on and from 1 January 2023 and are indexed annually on 1 January (except where indicated otherwise). The monetary thresholds applicable to a foreign person vary depending on whether for example:

• the proposed acquirer is from certain Free Trade Agreement ("FTA") partner countries;
• the proposed acquisition is a land or nonland acquisition;
• the sector in which the proposed acquisition operates, for example, the agricultural sector or national security; and
• the proposed acquirer is a foreign government investor.

Register of Foreign Ownership of Australian Assets

The Register of Foreign Ownership of Australian Assets ("Register") has created a variety of new reporting obligations for foreign investors, as well as Australian entities that become "foreign persons", in relation to certain interests in Australian land, entities and businesses. These are in addition to the existing obligations to seek approval from the Treasurer for certain transactions under the FATA.

Foreign investors are required to provide notice to the Commissioner of Taxation of certain transactions relating to interests in land, entities and businesses in Australia. Transactions that occur on or after 1 July 2023 are captured by the Register irrespective of when an approval was granted, if any). Where notice is required to be given to the Register, the notice must be given within 30 days of the "registrable event day" (which varies depending on the type of event but is generally the date on which the notifiable event occurs or when the person is aware, or ought reasonably to have been aware that the relevant event has occurred).

A summary of the key reporting obligations for the Register are as follows:

Section 50 is a broad prohibition that applies to any direct or indirect acquisition of shares in a corporation or business assets, wherever the acquisition may occur, including outside Australia if the acquisition would have the effect or likely effect of substantially lessening competition in any Australian market.

However, to be subject to the application of the CCA the transaction parties need to be carrying on business in some form in Australia if the transaction is a wholly foreign transaction occurring outside Australia.

There is no threshold shareholding for the purposes of section 50 of the CCA and acquisitions of any level of shareholding are subject to the CCA, which may apply depending on the 'likely effect' of the minority acquisition. Minority shareholding acquisitions may raise issues for the ACCC where they give rise to possible effects on competition such as an ability for the acquirer to influence the business decisions of the target company including its incentives to compete. The legal standard is whether there is an effect or likely effect of substantially lessening competition in the relevant Australian market.  

The following factors are typically relevant when considering whether the acquisition of a minority shareholding allows the shareholder to impact the company's incentives to compete: 

• The ownership distribution of the remaining shares and securities, including ordinary and preference shares and any special shares;
• The distribution of voting rights, including any special voting rights (such as veto rights); 
• Whether other shareholders are active or passive participants at company meetings; 
• Any restrictive covenants or special benefits attaching to shares; 
• Any pre-emption rights in relation to the sale of shares or assets; 
• Any other contracts or arrangements between the parties; 
• The rights and influence of any significant debt holders; 
• The composition of the board of directors; and  
• The company’s constitution.

A level of ownership less than a controlling interest that nevertheless alters the incentives of a party, or otherwise substantially adversely impacts competition, may give rise to a contravention of Section 50 of the CCA.

Foreign-to-foreign transactions can be captured under Sections 50 and 50A of the CCA if they would have the effect or likely effect of substantially lessening competition in a market in Australia.

Section 50 will apply to acquisitions that occur outside Australia if they involve bodies corporate incorporated in or carrying on business within Australia, or involve Australian citizens or persons ordinarily resident within Australia. An acquirer or target may "carry on business in Australia" through the operations of a subsidiary or by reason of an agency arrangement, even if the company itself has no direct business operations in Australia.

Section 50A will apply where a foreign-to-foreign transaction results in a controlling interest (being more than 50 percent) being acquired in a body corporate that carries on business in Australia. In this case, the Commonwealth Treasurer, the ACCC, or any other person, may apply to the Tribunal for a declaration of contravention if the acquisition of the controlling interest in the body corporate carrying on business in Australia would have the effect or likely effect of substantially lessening competition in a market in Australia, and would not result in a public benefit offsetting the lessening of competition.

Section 50A has never been applied to date. That is because overseas mergers that may have an effect on competition in Australia are usually considered under Section 50 and may be the subject of an informal clearance application in Australia (if both s 50 and s 50A apply, s 50 prevails). 

There is no formal notification threshold in Australia.  However, there are currently reform proposals for Australia to have a mandatory and suspensory merger control regime for mergers above certain thresholds. Any changes will require a legislative amendment to be implemented. The detail of the changes and a formal proposal to the Parliament has not yet been tabled and consultation about what the proposed changes may look like is ongoing.

The ACCC's Merger Guidelines encourage merger parties to notify the ACCC of a merger where both of the following apply:

• The products of the merger parties are substitutes or complements; and
• The merged firm will have a post-merger market share of greater than 20 percent in the relevant market(s).

The ACCC encourages merger parties to notify where the ACCC has indicated that notification of mergers in their industry sector would be advisable such as owing to a high concentration.

Filing is voluntary. However, see our comments above regarding the ACCC's proposed changes to the current merger regime to become mandatory and suspensory.

As notification is voluntary there are no notification deadlines. If there is a concern that the transaction may have the effect or likely or effect of substantially lessening competition in a market in Australia, merger parties are advised to notify the ACCC well in advance of completion of the transaction.  It is not necessary for parties to enter into definitive transaction documents before the parties can notify the ACCC.

There is no automatic waiting period following notification of a merger or application for authorization of a merger.

Informal Merger Clearance

There is no prescribed form if merger parties seek an informal clearance from the ACCC.  However, consistent with the ACCC's Informal Merger Review Process Guidelines, parties would commonly lodge an initial written submission containing the following:

• Information about the transacting parties including trading names, ownership details, and any relevant related bodies corporate;
• Details about the proposed transaction and an explanation of its underlying rationale; 
• Details of the Australian business operations, and the interests and assets of the acquirer and target;
• For any markets in which both the acquirer and the target currently supply goods or services, or for any market in which the acquirer and target have a customer/supplier relationship with another: 
  • Market shares of the suppliers for each market; 
  • The extent of imports to the market; and 
  • Any evidence of recent or likely future new entry or expansion; and 
• For mergers which the ACCC considers requiring a public review, a list of key customer and supplier names and contact details. 
• Both the ACCC's Informal Merger Review Process Guidelines and Merger Guidelines outline the information the ACCC is likely to take into account to determine whether and how the proposed transaction will affect competition.

Merger Authorization

There is no prescribed form for applying to the ACCC for merger authorization. However, the ACCC requires that a valid application must include:

• A version of the application that the ACCC can publish on its public register (a confidential version with marked confidential information can also be provided);
• A signed declaration by the applying acquirer and (if relevant) the target; and
• A signed statutory undertaking that the acquirer and target will not complete the proposed transaction until the ACCC's assessment is complete.

Applicants for merger authorization must also provide the ACCC with detailed information about the proposed transaction and the relevant industry and market.

Applications to the Tribunal for review of an ACCC authorization determination must be made using a prescribed form and within 21 days of the ACCC's determination. An application to the Tribunal for review must also include a court-enforceable undertaking that the applicant will not complete the acquisition while the application is being considered by the Tribunal.

There is no filing fee payable by parties requesting an informal clearance from the ACCC. For merger authorization applications, the fee is currently AUD $25,000.

Informal Merger Clearance

The ACCC's Informal Merger Review Process Guidelines set out approximate timeframes for the main stages of its merger review process. There is no prescribed timeframe for an informal clearance decision, with the timing of the decision dependent on the complexity of the issues raised by the transaction. References to potential timing in this section should be taken as indicative only.

Very straightforward matters may be the subject of pre-assessment or a "courtesy notification". This may involve a letter to the ACCC that sets out some limited details about the transaction and why it would not contravene section 50. This assessment may take between 2 - 4 weeks (likely up to 4 weeks if the notification is made on a confidential basis).

Relatively straightforward matters can be dealt with in the stage 1 review. This can take between 6 to 12 weeks, depending on the responsiveness of parties and stakeholders in providing information to the ACCC. This typically involves the acquirer providing a submission to the ACCC setting out the details of the proposed transaction and an outline of the potential competitive effects. The ACCC will undertake a public consultation process known as "market inquiries". This process is not confidential, and some information about the transaction will be advised to the market (customers, competitors and other interested parties) and posted on the ACCC's website.

A matter will move to a stage 2 review if the ACCC considers that competition issues may arise as a result of the merger. At the beginning of this stage, the ACCC will release a Statement of Issues ("SOI") to the market which sets out its concerns. If an SOI is released the parties will be invited to make further submissions to the ACCC concerning the competitive effect of the transaction before the ACCC makes a final decision. This stage can be as short as 6 to 12 weeks but may be longer.

Matters involving remedies (divestments or undertakings) are likely to involve complex competition issues and may cause the stage 2 review to be longer.  

The timeframe for informal merger clearance can be extended where the ACCC requests information from the merger parties until information satisfactory to the ACCC is provided. The duration of the delay will depend on how long it takes merger parties to provide the ACCC with the requested information.

The timing of an overall informal merger clearance process can be as little as between two to four weeks (where the matter is cleared on a pre-assessment basis and there are no market inquiries undertaken), but in complex matters can be up to a year or longer, particularly if the matter moves to litigation in the Federal Court (which may happen where the parties contest any decision of the ACCC or where the ACCC seeks court orders to prevent the parties from completing the transaction).

Merger Authorization

The revised merger authorization process is relatively new and involves:

• A pre-lodgement discussion between the applicant and the ACCC to outline the proposed merger and information likely to be needed by the ACCC to consider whether to grant authorization;
• The applicant lodging a valid application for authorization, which satisfies the requirements identified in our response to "What are the form and content of the initial filing?" above;
• The ACCC conducting public market inquiries and research and seeking further information from the merger parties;
• The applicant providing a response to the findings from public market inquiries; and
• The ACCC preparing a determination of whether to grant authorization.

The ACCC must reach a determination within three months of receipt of a merger authorization application but this may be extended to six months in complex cases. The time limit is also extended where the ACCC requests information from the merger parties for as long as it takes the parties to provide the requested information.  If no decision is made within the required time, the ACCC is taken to have refused to grant the authorization.

If the ACCC's determination of a merger authorization application is the subject of review by the Tribunal, the Tribunal must make a determination within three months, which may be extended by a further three months by the Tribunal. The Tribunal is deemed to have affirmed the ACCC's determination if it does not make its determination within the time limit.

Informal Merger Clearance

Section 50 of the CCA prohibits an acquisition if it would have the effect, or likely effect, of substantially lessening competition in any Australian market. "Likely" means "real chance" or "realistic commercial likelihood". A "substantial" lessening of competition is evaluative and refers to a lessening of competition that is "meaningful or relevant to the competitive process".

A merger will have the "likely effect" of substantially lessening competition if there is a 'real chance' or 'real commercial likelihood' of the harm occurring.  

Section 50(3) of the CCA sets out a list of factors that may be taken into account when determining whether a transaction will result in a substantial lessening of competition.  These factors are:

• The actual and potential level of import competition;
• The height of barriers to entry in the market;
• The level of concentration in the market;
• The degree of countervailing power in the market;
• The likelihood that the acquisition would result in the acquirer being able to significantly and sustainably increase prices or profit margins; 
• The extent to which substitutes are available in the market or are likely to be available in the market;
• The dynamic characteristics of the market including growth, innovation and product differentiation;
• The likelihood that the acquisition would result in the removal from the market of a vigorous and effective competitor; and
• The nature and extent of vertical integration in the market.

The ACCC has published guidance in its Merger Guidelines on the approach it takes to the assessment of mergers.

As part of its proposed reforms to the merger regime, the ACCC has proposed changes to the law that would:

• add to the "merger factors" required to be taken into account in section 50(3) of the Competition and Consumer Act 2010 (Cth):
• the loss of actual or potential competitive rivalry;
• increased access to, or control of data, technology or other significant assets;
• whether the acquisition is part of a series of relevant acquisitions; and
• whether the acquisition entrenches or extends a position of substantial market power; and
• include words in the legislation to make clear that the substantial lessening of competition test includes “entrenching, materially increasing or materially extending a position of substantial market power”.

Merger authorization

The ACCC can grant merger authorization if it is satisfied that either: (i) the proposed acquisition would not be likely to have the effect of substantially lessening competition, or (ii) the likely public benefit resulting from the proposed acquisition outweighs the likely resulting public detriment.  The merger authorization process provides an alternative to the informal merger review process.

The concept of "public benefit" is broad and anything of value to the community in general that arises from the acquisition can be taken into account. Most public benefits can be attributed to improvements in economic efficiency by addressing a source of market failure or market imperfection. Public benefits may include:

• reducing transaction costs;
• addressing an externality;
• reducing information asymmetry;
• achieving economies of scale, scope or density;
• facilitating the provision of public goods;
• addressing a principal/agent problem; and
• avoiding the hold-up problem.

In mergers, the ACCC asks: Describe all benefits and detriments to the public likely to result from the proposed acquisition, including those likely to result from any lessening of competition. In addressing the likely benefits of the proposed acquisition, including details of any significant increase in the real value of exports, any significant substitution of domestic products for imported goods, and any other relevant matters that relate to the international competitiveness of any Australian industry. Provide information, data, documents or other evidence relevant to the ACCC’s assessment of the public benefits and detriments.

Likewise, all "public detriments" likely to arise from the proposed acquisition for which authorization is sought can be taken into account. This includes detriments that occur outside of the market or markets in which a lessening of competition has been identified. For example, if a proposed acquisition was likely to increase pollution or reduce public health and safety then these would be taken into account in applying the net public benefit test.  In most cases, the likely identifiable detriments will be those constituted by a lessening of competition.  

Informal Merger Clearance

The ACCC may: 

• Refuse to grant informal merger clearance; 
• Grant merger clearance with no conditions; or
• Grant merger clearance subject to conditions. 

As the informal merger clearance system is voluntary, in practice a "decision" to grant informal merger clearance is a letter of non-objection or non-intervention from the ACCC.

Where clearance is granted subject to conditions, it is common for the ACCC to require compliance with the conditions by insisting that the acquirer enters into a formal binding and court-enforceable undertaking to the ACCC. Such undertakings can require acquirers to divest existing assets or hold separate competing operations. In some cases, behavioral undertakings may also be offered and accepted, though the ACCC has a strong preference for structural undertakings.

Merger Authorisation

The ACCC and Tribunal on review of an ACCC determination may grant authorization subject to conditions, including structural conditions (such as divestiture) and/or (rarely) behavioral matters. If authorization is made subject to conditions, the authorization will only provide protection from the operation of section 50 of the CCA if the transaction is completed in accordance with the conditions.

Transaction parties can proactively provide the ACCC with a commitment to implement structural or other measures that address any identified or anticipated competition concerns. These commitments are given as undertakings, which are enforceable in court by the ACCC under Section 87B of the CCA. Transaction parties may offer remedies at any stage of the ACCC's review process, including at the outset.

If the ACCC is satisfied that the proposed undertaking addresses the competition concerns, it may accept the undertaking and allow the transaction to proceed. The content of an undertaking offered to address ACCC concerns is at the discretion of the party offering it as a remedy, however, the ACCC will not accept an undertaking if the ACCC is not satisfied that it will address its competition concerns. In practice, the ACCC will often be actively involved in negotiating the content of a proposed undertaking and in consulting the markets affected on whether the undertaking is likely to be effective.

The ACCC's Merger Guidelines state that the ACCC has a strong preference for structural remedies, and it is rare for the ACCC to accept behavioral remedies to remedy competition concerns that may arise following a merger or acquisition.

Where the transaction parties do not file a clearance application with the ACCC and the ACCC finds that the acquisition will, or is likely to, result in a substantial lessening of competition, the ACCC may seek the penalties outlined in our response to "Describe the penalties applicable to the implementation of a merger before clearance or of a prohibited merger." below. 

There are no automatic sanctions for filing an incomplete notification. In providing an informal clearance, the ACCC letter of non-objection or non-intervention will expressly reserve its right to reconsider the matter if incorrect or incomplete information has been provided to it.

The ACCC may revoke its authorization of a merger if it was granted on the basis of evidence or information provided by the transaction parties that is false or misleading.

It is an offense to provide misleading information to a government agency such as the ACCC.

If the ACCC considers that a transaction is likely to result in a substantial lessening of competition, the ACCC can seek an injunction in the Federal Court of Australia to prevent the transaction from occurring or to unwind a transaction that has already been completed. The ACCC may also seek other remedies including damages, divestiture and pecuniary penalties. 

These remedies will generally be sought against the purchaser although it is possible for the vendor to also be liable. The maximum pecuniary penalty per contravention that can be imposed by the Federal Court of Australia upon application by the ACCC is:

• For individuals: AUD $2,500,000;
• For corporations: the greater of 
  • AUD $50,000,000; or
  • if the court can determine the value of the benefit obtained, three times the value of that benefit; and
  • if the court cannot determine the value of the benefit obtained, 30% of the body corporate's adjusted turnover during the breach turnover period for the offence, act or omission.

Where an undertaking not to complete a transaction has been given as part of the merger clearance or authorization process, proceeding with the acquisition without clearance will amount to a breach of the undertaking. This could result in a range of court orders being made, including an order directing the person who gave the undertaking to comply with its terms.

Yes, because the merger regime is voluntary, it is possible for parties to take a view that their transaction does not require notification on the basis it would not have the effect or likely effect of substantially lessening competition in a relevant market.

If, in contrast, the ACCC considers that a transaction is likely to result in a substantial lessening of competition, it can seek an injunction to prevent the transaction from proceeding or seek pecuniary penalties for a breach of section 50 once the transaction has closed, even if it was not previously notified of the proposed transaction.

In 2019, the Federal Court imposed an AUD $1.05 million penalty in the first (and to date, only) "gun-jumping" proceedings brought by the ACCC.

The ACCC can challenge any transaction by applying to the Federal Court of Australia for remedial orders. The ACCC cannot impose remedies or sanctions for a breach of Section 50 of the CCA on its own initiative.

The ACCC continues to assess proposed transactions on their merits and based on the specific nature of each transaction and the surrounding circumstances. The ACCC approaches its assessment by identifying any relevant competitive theories of harm and testing these to determine if those theories are likely to materialize if the proposed transaction were to proceed. The ACCC will also consider the effect of any competitive constraints that are identified as applying to the merged entity, post-transaction. Areas of particular interest and/or enforcement priority include Energy (including Gas); Airlines, Transport and Logistics; Infrastructure, Financial Services, and Digital Platforms.

Chair Gina Cass-Gottlieb commenced her 5-year appointment as Chair of the ACCC on 21 March 2022. She replaced Rod Sims who served as Chair from 1 August 2011 to 20 March 2022.

If the ACCC's proposals regarding merger control are tabled to the Parliament and accepted by the Australian Government, Australia's merger regime would become mandatory and suspensory like the foreign investment regime, with a consequential impact in global transactions where ACCC engagement will be required where a threshold is met and often earlier than currently.