The ACCC has released draft updated Merger Review Process Guidelines (Draft Guidelines). Rather than signalling significant changes to the ACCC’s informal merger review process, the Draft Guidelines reflect the ACCC’s current practices which have evolved since the Guidelines were last updated in 2006. The Draft Guidelines also provide additional insight into the steps involved, and the anticipated timeframes, for each stage of the review process.
The ACCC is in the process of seeking views on the Draft Guidelines, and submissions are due on Friday 19 July 2013.
As detailed in this note, the key proposed changes include new ACCC processes relating to:
- a “pre-assessment” of the large number of non-contentious mergers notified to the ACCC;
- establishing review timelines, including the setting of more realistic timelines and the use of “provisional” decision dates;
- publishing more detail about the stages involved on the ACCC’s mergers register;
- providing feedback from the ACCC to merger parties on the market’s issues and concerns; and
- publishing Public Competition Assessments.
The ACCC’s “new” general approach is summarised in the flowchart below.
Figure 1: Overview of informal merger review process (source: ACCC Draft Guidelines, page 6)
Click here to view Figure 1.
A key change in the Draft Guidelines from the 2006 Guidelines is the inclusion of the ACCC’s “pre-assessment” review process, which has been used since at least 2010 for non-contentious transactions. Pre-assessment involves a review of mergers on the papers without public review. Given that in 2011/2012, 73% of the mergers considered by the ACCC were cleared through pre-assessment,1 it is fitting that the Draft Guidelines now reflect the ACCC’s practice.
Updated anticipated review timelines more reflective of current practice
The ACCC’s Draft Guidelines indicate typical timeframes for each of the three key stages: namely, that 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.
The overall timeframe presented in the Draft Guidelines is broadly in line with current timeframes. For example, in 2012, the 13 transactions that involved the publication of an SOI took an average of 11 weeks to complete “Phase I” (ie the “public review” stage identified in the Draft Guidelines) and an average of 12 weeks to complete “Phase II” (ie the “post-SOI” stage identified in the Draft Guidelines), a total of 23 weeks in total on average.
Clarification regarding timing-related terminology
The Draft Guidelines provide an explanation of timing-related terminology used in the informal merger review process. For example, the ACCC explains:
- the basis on which “indicative timelines” are set and amended, and also explains how these will differ from “revised timelines” which are set after an SOI is published;
- that “provisional decision date” means a decision date that is published in an indicative timeline for review, which will be typically 6-12 weeks away, but may be longer if the ACCC considers the matter is likely to be complex or contentious; and
- that “proposed decision date” means the decision date published by the ACCC after providing feedback to the merger parties on issues arising from market inquiries and receiving any response to that feedback.
Additional details about steps involved
Another welcome change in the Draft Guidelines is the additional level of detail provided in relation to each of the steps involved in each of the review stages. These details include not only a description of these steps, but also the approximate duration of each step and an identification of the factors that may cause anticipated timeframes to vary. This increased level of transparency on the part of the ACCC will assist merger parties and their advisors to better understand and anticipate where potential “stress points” may arise in commercial deal timetables.
The Draft Guidelines make clear that following initial market inquiries and again after the consultation process that follows a Statement of Issues (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.
Fewer details in relation to confidential merger reviews?
The general approach taken by the ACCC in relation to confidential merger reviews has not changed substantially. Similarly to the 2006 Guidelines, the Draft Guidelines still indicate that the ACCC will not conduct confidential reviews of proposed mergers that are public knowledge, completed or purely speculative or hypothetical; the ACCC cannot provide unqualified views in relation to proposed mergers; and the confidential review process will still take around a maximum of 4 weeks.
However, it appears that there has been 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 Draft Guidelines do not refer to the ACCC identifying any such issues or concerns. Only time will tell whether the approach in the Draft Guidelines will manifest in less detailed responses to requests from merger parties for a confidential review of a proposed transaction.
… and what about PCAs?
One area in which the issue of timeliness does not seem to have been addressed in the same manner is in relation to Public Competition Assessments (PCAs). 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.
These merger reviews are likely to be of key importance and interest to the business community. However, while the Draft Guidelines state that the ACCC endeavours to publish PCAs as soon as practicable after the announcement of an ACCC decision, in recent years there have been some relatively lengthy delays in publishing PCAs for some matters.
More guidance about confidential information, including in the context of dealing with international competition agencies
The guidance provided by the ACCC regarding the confidential nature of the information provided by the merger parties and third parties reflects the ACCC’s current practice. This is particularly the case in the specific reference to the “protected information” regime.
The Draft Guidelines also 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). 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 ACCC is seeking views in relation to the Draft Guidelines by Friday 19 July 2013. Gilbert + Tobin will be making a submission. If you would like to provide a submission to the ACCC, you may do so via the channels set out here: https://consultation.accc.gov.au/mergers-and-adjudication/merger-process-guidelines.