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What are the potential outcomes of a merger control investigation in Australia?
A merger investigation may result in the Australian Competition and Consumer Commission deciding to oppose or not oppose the merger. If the commission decides not to oppose a merger, the process is concluded. Given the informal nature of the process, such a decision does not result in legal immunity for the merger parties. However, in practice, the commission does not take action against the parties once it has decided not to oppose the merger – unless new information comes to light suggesting that a different conclusion should have been reached.
If the commission decides to oppose a merger and the parties have not yet completed the transaction, potential outcomes include that the parties do not proceed with the merger or wish to complete the merger.
The parties can proceed on the risk that the commission will commence proceedings in court to injunct them or seek pecuniary penalties. In these circumstances, the parties will need to defend the merger in court.
The parties also have the option of seeking authorisation from the Australian Competition Tribunal or seeking formal clearance, after which there would be a right of appeal to the tribunal to review the transaction de novo, by offering undertakings under Section 87(B) of the Competition and Consumer Act 2010 (Cth) which address the commission’s competition concerns. If accepted, the parties can proceed to complete without the risk of court action.
In the event that the parties proceed with a transaction that the commission opposes and the court finds in the commission’s favour, the court may order:
- that the parties pay a pecuniary penalty up to the limit of the greater of A$10 million, three times the value obtained or 10% of annual turnover (Section 76);
- an injunction to prevent the parties completing (Section 81); or
- that the parties divest assets or unwind a transaction (Section 81).
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