Overview of merger authorisations

Authorisation is the process of granting protection to the acquirer from the application of s. 50 of the Act, on public benefit grounds, for mergers and acquisitions which would or might otherwise contravene s. 50. Authorisation only provides protection from legal action for acquisitions that have not already taken place. Applications must be made directly to the Australian Competition Tribunal (the Tribunal).

Authorisation cannot be sought for an acquisition that has already occurred and, except in certain circumstances, authorisation cannot be sought from the date upon which a contract for the acquisition has been entered into.

Applications may also be made to the Tribunal for minor variation, revocation and revocation and substitution of merger authorisations.

The test

The Act provides that the Tribunal may grant an authorisation to a person:

(a) to acquire shares in the capital of a body corporate; or

(b) to acquire any assets of a person.

If the Tribunal grants an authorisation, s. 50 does not prevent the person from acquiring the shares or assets in accordance with the authorisation.

The Tribunal must not grant an authorisation relating to a proposed acquisition of shares or assets unless it is satisfied in all the circumstances that the proposed acquisition would result, or would be likely to result, in such a benefit to the public that the acquisition should be allowed to occur.

Once authorisation is granted in relation to an acquisition, neither the ACCC nor any other party may take action under s. 50 in respect of the acquisition. The protection is only effective, however, once authorisation is granted and for the period for which authorisation is granted. If an acquisition takes place outside this period, the applicant will not have the benefit of protection from the operation of s. 50.

Time limits for decision

The Act requires that the Tribunal issue a determination on an authorisation application within three months of receiving a valid application. If no decision is made within this period, the Tribunal is taken to have refused to grant the authorisation.

There is scope for the Tribunal to extend the time allowed for making a determination by up to three months if it considers that the matter cannot be dealt with properly within that period because of its complexity or because of other special circumstances. If the Tribunal wishes to extend the period for making a determination, it will notify the applicant in writing of the extension before the expiry of the initial three-month period.

Role of the ACCC

The Act states that the Tribunal must require the ACCC to give a report to the Tribunal on the matters specified by that member within the period the member requires. The ACCC may also include in that report any matter it considers relevant to the application. The ACCC’s report will not constitute a decision by it on the application; rather, it will be the ACCC’s opinion on the application at that stage.

The Act also states that in assisting the Tribunal, the ACCC may:

  • call a witness to appear before the Tribunal and to give evidence in relation to the application
  • report on statements of fact put before the Tribunal in relation to the application
  • examine or cross-examine any witnesses appearing before the Tribunal in relation to the application
  • make submissions to the Tribunal on any issue the ACCC considers relevant to the application.

Applicants and market participants should refer to the Tribunal's practice directions for more details about the Tribunal's consideration of merger authorisation applications.

More details on merger authorisations and the processes involved are available on the Tribunal website and in chapter 6 of the ACCC’s Formal merger review process guidelines 2007.
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