I am currently in negotiations with a friend who is also a small business owner to merge our companies. My friend tells me that he has looked into this and we do not need to notify the ACCC as our merger is not going to affect competition in the market. I am concerned that any contracts we enter into together may unravel and we may face penalties if this merger is not properly authorised. I would like to know what could happen if we went ahead with the merger without notifying the ACCC.
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Answer by Dilani Mudalige, Yokine 6060 WA
- Your friend is correct in saying that parties to a merger are not legally required to notify the ACCC of the merger. The fact that you are not legally obliged to notify them does not prevent the ACCC from investigating the merger on their own initiative.
- Your concerns about proceeding with the merger without notifying the ACCC are justified. It is possible that you and your friend would be placed at risk of possible legal action by the ACCC or other interested parties.
- The safest option is to voluntarily approach the ACCC regarding the merger to discuss any possible competition issues.
- If you decide not to approach the ACCC regarding the merger and they decide to challenge it the ACCC can seek legal action including:
- injunctions stopping the companies from completing transactions or preventing business reconstruction after an acquisition;
- forced divestiture (selling) of the companies’ assets;
- compensation for customers or competitors; and
- imposing up to $10 million in penalties on a company. The company’s key employees can also face up to $500,000.