At the current time, parties looking to progress a merger have the option of an informal clearance or a formal authorisation. This regime provides considerable flexibility and choice for them in managing the merger control risks associated with their acquisitions.
We don't believe there is a compelling case to replace the current regime with a mandatory and suspensory merger review regime, for the following reasons:
- There is solid evidence that the current regime is respected and works well – it is both efficient and effective, and offers a great deal of flexibility to the ACCC and merging parties, which will be lost with the introduction of a mandatory regime.
- There is also little evidence that the ACCC is not 'catching' undesirable mergers under the current scheme, and there is a risk the introduction of a mandatory regime will ultimately result in 'over capture'. This is not theoretical – there are practical consequences, given the increased demand (and costs) involved in the ACCC appropriately staffing the review of mergers to ensure timely approval.
- The current regime gives the ACCC wide powers and the ability to direct its efforts in a targeted way, by focusing on reviewing transactions that are likely to have the most impact on competition, without regard to thresholds or 'control' principles. This means that enforcement efforts (and funds) can be appropriately targeted and spent.
- The regulator could be underestimating the work required to establish such a regime, particularly as significant and material points of detail still need to be resolved – eg how it would be funded.
- Australia is already a heavily regulated market, particularly considering its size, and a mandatory regime could put business investment at risk. Arguably, the ACCC currently enjoys wider powers to review minority transactions than foreign agencies with mandatory regimes.
- The ACCC, in consultation with government, competition law specialists and the business community, will clearly be giving further consideration to the design of a mandatory merger regime in Australia in the months to come. We look forward to contributing to that conversation.
The release of reform proposals is likely to generate significant debate among and interest from the business community.