Consideration of merger proposals on an informal basis provides the merger parties with the ACCC’s informal view on whether a particular proposal is likely to breach s. 50 and whether the ACCC would challenge the merger in the Federal Court. The majority of mergers that are considered on an informal basis by the ACCC are notified by the merger parties in advance. Alternatively the ACCC may initiate informal reviews in response to information from other sources including from complainants, information from Australian and overseas regulators and media reports.
An informal view by the ACCC not to oppose a merger or acquisition does not provide merger parties with protection from legal action by the ACCC or other parties under section 50. While the informal system provides no review mechanism to the merger parties or third parties to appeal the ACCC’s informal decision, recent refinements in the process of review have sought to give greater opportunity to merger parties and interested parties to provide responses to a preliminary view, and a transparent mechanism where concerns are proposed to be resolved through administrative means (through publication and a consultation process where undertakings are being considered).
If the ACCC considers that an acquisition contravenes s. 50 and the merger parties do not agree to modify or abandon the acquisition, the ACCC can apply to the Federal Court for an injunction, divestiture or penalties.
Although there is no compulsory pre-merger notification requirement in Australia, parties proposing to undertake a merger or acquisition are strongly encouraged to approach the ACCC when a merger is contemplated and certainly before a merger is completed, particularly if the merger or acquisition could affect competition. The sooner parties approach us to discuss a proposed merger, the sooner we will be able to provide its view. These discussions may be held either when the merger proposal is confidential and/or after the merger proposal becomes public.
In assessing the likely effect on competition of proposed acquisitions, we will take into account the merger factors listed in s. 50(3) of the Act including, among other things, the height of barriers to entry, market concentration and the level of imports. To provide greater certainty to merger parties on the information needed by us to assess an application, the assessment process and the merger factors are explained in detail in the Merger guidelines (see, in particular, chapter 5 of the Merger guidelines 2008).
The s. 50(3) merger factors are not an exhaustive list. Other factors that may be relevant to the assessment can be taken into account, such as strategic or other behavioural considerations, the likelihood of coordinated conduct and, to the extent that they may be relevant, efficiency enhancing aspects of a merger that affect the competitiveness of the market. While the nature of the information required may vary with the type and complexity of the transaction, we will generally examine each of the merger factors in assessing a proposed acquisition.
The analytical framework and application of s. 50 to mergers and acquisitions is discussed in more detail in the ACCC’s Merger guidelines 2008, which outline the ACCC’s administration and enforcement policies in relation to mergers and includes a discussion of the merger factors.
For information regarding informal review processes and details regarding informal applications, refer to the ACCC’s Merger review process guidelines 2006.
