Below is an excerpt from our new Negotiated Acquisitions and Buyouts book, authored by Nick Humphrey, one of Australia’s leading corporate and private equity lawyers, releasing on 6 December 2016.
The ACCC’s Merger Guidelines
Australia has a voluntary pre-merger notification regime, administered by a well-resourced and proactive antitrust authority, the Australian Competition and Consumer Commission (ACCC).
The ACCC’s Merger Guidelines recommend that business should seek clearance from the ACCC in the event that the post-merger market share of the merged entity is greater than 20%.
After appropriate investigation and market inquiries, the ACCC can clear a transaction relatively promptly. If it has concerns with a proposal, it has extensive investigatory powers, which can result in a lengthy second phase process that has no statutory time limit.
Ultimately, if the ACCC has concerns with a merger, it will commence proceedings in court to restrain its completion or seek divestiture of the acquired shares or assets.
Introduction to Mergers
As in the merger control regimes in many jurisdictions, Australia prohibits acquisitions that are likely to have the effect of substantially lessening competition in an Australian market.
There is, however, no mandatory merger notification in Australia. Parties desiring to have their proposed mergers reviewed must elect one of three separate review processes:
- informal merger clearance
- formal merger clearance, and
The ACCC reviews mergers under the informal clearance process and under the formal clearance process (since its introduction in 2007 there have been no applications for formal merger clearance). Parties may seek authorisation of their transaction from the Australian Competition Tribunal (Tribunal), a process in which, at present, the ACCC has no role. There are likely to be legislative changes later in 2016 or 2017 to combine the formal clearance and authorisation processes to be administered by the ACCC with scope for a review by the Tribunal.
Under the informal clearance process, there is no appeal or review process as such. Rather, the parties can make a formal application to the Federal Court of Australia (Court) for a declaration that the proposed transaction does not violate the law. Alternatively, the parties can press ahead to complete the transaction, forcing the ACCC to seek orders from the Court if it has concerns about the transaction. The parties also can offer to the ACCC Court-enforceable remedies.
In the formal clearance process, the parties have a right of appeal to the Tribunal for errors of law.
Finally, under the authorisation process, the Tribunal’s decision can be reviewed on appeal to the courts for errors of law.
Negotiated Acquisitions and Buyouts is a reference guide for anyone involved in acquisitions, divestments and private equity with step-by-step advice on the key legal, tax and structuring issues when implementing transactions.
About Nick Humphrey, the Author
Nick Humphrey is one of Australia’s leading corporate and private equity lawyers. He is a Partner and National Head of M&A and Private Equity at K&L Gates and has worked in leading corporate groups throughout his distinguished career, including Mallesons Stephen Jaques and Norton Rose in Sydney, and the private equity group at Clifford Chance in London.
Nick focuses on partnering with institutions and private equity funds (and their portfolios) and is very experienced in negotiating large and complex acquisitions, divestments and investments, including structuring share sales, negotiating shareholder and subscription agreements and conducting due diligence investigations.
He has acted on some of Australia’s highest profile deals and is the author of eight best-selling business books including Wolters Kluwer’s Australian Private Equity Handbook and the soon to be published Maverick Executive: Strategies for Driving Clarity, Effectiveness and Focus (scheduled for release in December 2016).