Competition & Trade Practices
9. Mergers and Acquisitions
Authors: Staff Legal Eagle
Firm / Chambers:
Last updated: 11 Jul 2015
- The Competition and Consumer Act 2010 (Cth) prohibits mergers and acquisitions that might reduce competition in a market. The Australian Competition and Consumer Commission's (ACCC) has responsibility for the investigation and review of transactions relating to mergers and acquisitions to ensure that the legislation is being complied with.
- Although notifying the ACCC of a proposed merger is voluntary if you opt not to notify them they still have the power to investigate the merger at their own initiative, make public inquiries and if necessary take legal action.
- Given that an investigation by the ACCC can have a detrimental impact on an impending merger some companies may wish to obtain an assessment from the ACCC. There are three options available to you if you want to have your merger considered and assessed by the ACCC.
- The first option is an informal merger review. An informal merger review involves the parties requesting a 'letter of comfort' from the ACCC stating that it has no intention of opposing the proposed merger.
- The second option is a formal merger clearance. A formal merger clearance is a legislative process whereby the parties are effectively given immunity from legal action by the ACCC or any other party with regard to the merger providing that the merger is conducted in accordance with the clearance.
- You will only be granted a formal clearance where the ACCC is satisfied that the merger is unlikely to cause a substantial lessening of competition.
- Formal clearance should be sought prior to the merger taking place.
- A clearance from the ACCC does not prevent a third party such as a customer, distributor or competitor from taking legal action.
- The third option is a merger authorisation. Merger authorisations can be granted by the Australian Competition Tribunal only where the public benefit would outweigh any anti-competitive detriment caused by the merger. Neither the ACCC nor a third party can take legal action during the period for which authorisation is granted.
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