Australia may see a more streamlined merger clearance process in the future after the Government decided to support the recommendations of the Harper Review’s Final Report in relation to competition merger law. The Government has committed to developing exposure draft legislation for public consultation on changes to the formal merger review process and has noted its expectations of the Australian Competition and Consumer Commission (ACCC) in relation to the informal merger review process.
Changes to merger laws are likely to impact businesses in the following key ways:
- Merger parties may receive merger clearance decisions more quickly.
- Merger parties will have less options to choose from when considering which form of merger clearance they will seek.
- All merger clearances will initially need to be sought from the ACCC as the option of obtaining merger authorisation by the Australian Competition Tribunal (Tribunal) in the first instance will no longer exist.
WHY IS CHANGE REQUIRED?
The final Harper Report noted that there was wide support for retaining the informal merger review process but that strong concerns had been expressed about the timeliness and transparency of the process. The Panel saw scope for further consultation between the ACCC and business representatives regarding the informal review process. The Panel’s view was that concerns about timeliness and transparency of merger reviews could also be addressed through a more streamlined formal review process. The Tribunal noted that the current formal processes were excessively complex and prescriptive, and that this had deterred the use of those mechanisms and fuelled complaints about the way the informal process was applied to large mergers involving contested facts and issues.
The diagram below shows how the Government’s proposed process may differ to the current merger clearance process:
Click here to view table.
TIMELINE FOR MAKING INFORMAL MERGER CLEARANCE DECISIONS
The Government’s view that consultation should occur between the ACCC and business representatives with the objective of delivering more timely informal merger decisions is a sound one. However, the lack of any statutory framework underlying the informal merger review process means that merger parties may not ultimately see any change in the time taken for decisions to be made under this process. Merger parties should keep in mind that the benefit of flexibility, which they enjoy under this process, is one reason why the informal review process may take longer than expected. Therefore, parties requiring a quick decision above anything else may want to consider whether the formal process is a more preferable option for them.