On Friday the ACCC published its finalised Informal Merger Review Process Guidelines (Process Guidelines) here. The Process Guidelines were informed by a consultation process conducted by the ACCC following the release of the draft Updated Merger Review Process Guidelines (Draft Guidelines) in June this year.
The Process Guidelines do not substantially differ from the Draft Guidelines. As noted in our prior update in relation to the ACCC’s release of the Draft Guidelines, rather than signalling significant changes to the ACCC’s informal merger review process, the Process Guidelines reflect the ACCC’s current practices which have evolved since the last update in 2006. The Process Guidelines also provide additional insight into the steps involved, and the anticipated timeframes, for each stage of the review process.
The key changes in the ACCC’s processes that are addressed in the Process Guidelines are set out below.
The Process Guidelines reflect the inclusion of the ACCC’s pre-assessment review process (involving a review of mergers on the papers without public review), which it has developed to deal quickly with the large number of non-contentious mergers notified to it. The ACCC has observed that the benefit of the pre-assessment process is that the ACCC is able to concentrate its efforts on those mergers which it considers raise more significant concerns under section 50 of the Competition and Consumer Act 2010 (Cth) (the Act).
The typical timeframes set out in the Process Guidelines are the same as those set out in the Draft Guidelines – namely:
- pre-assessment typically lasts approximately 2 weeks;
- the public review stage typically lasts 6-12 weeks; and
- the post-Statement of Issues (SOI) stage typically lasts 6-12 weeks.
Cumulatively, this translates to a typical maximum timeframe of 26 weeks, and a guide of 8-14 weeks for matters that do not require an SOI.
As noted in our prior update regarding the Draft Guidelines, the overall anticipated timeframe presented in the Process Guidelines is broadly in line with current timeframes, although it is longer than that set out in the ACCC’s 2006 Guidelines. Relevantly, Mr Rod Sims has observed that, “While the Guidelines indicate a move away from setting standard periods for all public reviews, the ACCC expects that the majority of merger reviews in which substantive competition concerns do not arise will still be completed within eight weeks”.1
One difference between the Draft Guidelines and the Process Guidelines is that the flowchart setting out these timeframes (replicated below) now includes reference to a “confidential review” stage which can be conducted at the request of the Parties. This is a helpful amendment to the Draft Guidelines as it provides greater clarity in relation to the process for merger parties.
Click here to view flowchart.
As noted in our prior update regarding the Draft Guidelines, the Process Guidelines provide a more detailed explanation about timing-related terminology used in the ACCC’s informal merger review process.
In addition to explaining the basis on which “indicative timelines” are set and amended and how they differ from “revised timelines” that are set following the publication of an SOI, the Process Guidelines also explain the distinction between the “provisional decision date” (being the decision date published by the ACCC at the outset of a public review which is subject to later review and amendment) and “proposed decision date” (the decision date that replaces the provisional decision date following market inquiries and any response by merger parties to issues raised during market inquiries).
Additional details about steps involved
The Process Guidelines provide greater detail in relation to each of the steps involved at each stage of the ACCC’s informal merger review process. This increased level of transparency will assist merger parties and their advisors to better understand and anticipate where potential “stress points” may arise in commercial deal timetables.
An addition to the Process Guidelines that was not previously in the Draft Guidelines is a table setting out the avenues for legal challenge that can be taken by the ACCC, merger parties and third parties, and remedies or relief that can be sought in relation to possible breaches of section 50 of the Act.
The Process Guidelines clarify that following initial market inquiries, and again after the consultation process that follows an SOI, the ACCC will provide merger parties with details of any relevant issues or concerns arising during market inquiries. This is another change that reflects current practice.
The Process Guidelines also provide additional drafting (not previously included in the Draft Guidelines) clarifying that in providing feedback to the merger parties, the ACCC may raise issues which have been identified during market inquiries but on which the ACCC has not yet formed a view, and that in relation to such additional relevant issues, the ACCC will provide merger parties with the opportunity to comment on these prior to making a final decision.
In relation to situations where the ACCC decides to oppose a merger without releasing an SOI, the Process Guidelines include additional drafting (not included in the Draft Guidelines) providing that in such circumstances, the merger parties will be made aware that the ACCC will be making a final decision without an SOI, and will be provided with the opportunity to respond to issues and concerns arising from market inquiries.
Requests for information from the ACCC
The approach outlined in the Process Guidelines in relation to the ACCC’s request for information from merger parties prior to commencing and throughout a merger review is consistent with its current practice.
The Process Guidelines provide additional detail (compared with the Draft Guidelines) in relation to examples of situations in which the ACCC might seek to use its statutory information gathering powers under section 155 of the Act to compulsorily acquire information and documents from merger parties and, on occasion, third parties. The non-exhaustive list of examples provided by the ACCC includes:
- merger reviews where critical information required by the ACCC will most efficiently be sought through the use of s 155 notices;
- situations where the ACCC considers certain information would be unlikely to be provided in response to a voluntary request for information; and
- situations where third parties would prefer to be compelled to provide certain information or documents than providing them voluntarily (due to fears of reprisal or commercial damage).
Confidential merger reviews
As noted in our prior update in relation to the Draft Guidelines, the general approach taken by the ACCC in relation to confidential merger reviews in the Process Guidelines has not changed substantially, save as to a slight narrowing of the output of a confidential review conducted by the ACCC.
For example, the 2006 Guidelines indicated that if the ACCC could not form a view on the competitive implications of the merger without market inquiries, the ACCC would usually identify the issues it proposed to focus on in market inquiries and, if possible, any concerns identified on a preliminary basis. However, the Process Guidelines do not refer to the ACCC identifying any such issues or concerns. We will monitor with interest whether the ACCC’s approach as set out in the Process Guidelines will manifest in less detailed responses to requests from merger parties for a confidential review of a proposed transaction.
Public Competition Assessments (PCAs)
PCAs are typically published in relation to merger reviews that are of key importance and interest to the business community. As the ACCC recognises, PCAs are intended to provide guidance to the public about the ACCC’s analysis of the competition issues in mergers that are opposed, subject to enforceable undertakings, or cleared but raise important issues that the ACCC considers should be made public. The Process Guidelines include an additional situation not identified in the Draft Guidelines, being when the merger parties seek such disclosure.
Several amendments have been made to the drafting in the Process Guidelines, compared with the previous drafting in the Draft Guidelines, as set out below. We consider that these amendments are a positive change as they provide greater transparency in relation to the ACCC’s decision-making process and suggest that PCAs will be published closer to the announcement of an ACCC decision, as distinct from the relatively lengthy delays in relation to some recently published PCAs:
- the anticipated timeframe for publication of PCAs is to be “as soon as practicable after the announcement of a final decision” and that the ACCC will aim to do so “within 30 business days of making a decision”; and
- if a merger becomes the subject of litigation shortly after an ACCC decision to oppose it, the ACCC’s publication of a PCA may be delayed. From a transparency perspective, this approach is preferable to the position in the Draft Guidelines which suggested that if there was the prospect of litigation following an ACCC decision to oppose a merger, the ACCC would delay releasing the PCA until confirmation was received that the merger parties will not proceed with the merger and further, that in circumstances where an ACCC decision to oppose a merger proceeded to litigation, the ACCC generally would not publish a PCA at all.
International mergers – confidentiality, timing implications and remedies
The Process Guidelines provide a more detailed description of the ACCC’s treatment of information in the context of international mergers. In particular, there is a more detailed discussion about the nature of the confidentiality waiver that the ACCC will seek from merger parties (and reference is made to a standard form waiver that will be provided to merger parties). The Process Guidelines also note that the ACCC expects to be given the same notice of mergers and any potential remedies as overseas competition agencies with simultaneous lodgement of submissions where possible.
There is also explicit recognition that if a transaction is being reviewed by overseas competition agencies, the ACCC may suspend its review of the transaction in order to consult with those agencies or in some circumstances, pending the outcome of reviews by those agencies. The Process Guidelines clarify that such a suspension of the timeline may be in circumstances where:
- the ACCC and overseas agencies are liaising closely on substantive competition issues or proposed remedies; or
- the merger raises issues in Australia that are of a global nature and there are no issues arising that are unique to Australia, in which case the timeline may be adjusted to coordinate with the timing of reviews by overseas agencies to allow the ACCC to take into account relevant information from those overseas reviews.
In relation to competition concerns arising in Australia capable of being resolved by remedies, the Process Guidelines note that the ACCC will generally require that undertakings be provided to the ACCC to address those issues in Australia and ensure that the ACCC has the ability to enforce them, and that this will generally be the case even if undertakings have been given to an overseas competition regulator.