Boosting competition has been one of the cornerstones of the Albanese government's economic plan ever since we came to office.
This week we're taking another big step towards making our economy more competitive, by introducing the single biggest reform to Australia's mergers law in 50 years to parliament.
Our new merger rules will improve how these types of deals are approved across the board.
They will make the system faster, stronger, simpler, more targeted and more transparent.
They will also create certainty for businesses that have been forced to navigate an unclear and antiquated merger system for decades.
Under our current merger approvals regime, businesses that are looking to merge don't know if they need to notify the competition regulator, when they need to notify the competition regulator and how to best go about it.
This will all change under the new regime.
We will set clearly defined monetary thresholds that will determine whether a merger needs ACCC approval before proceeding.
There will be 3 key thresholds.
Firstly, any merger will be looked at if the Australian turnover of the combined businesses is above $200 million, and either the business or assets being acquired has Australian turnover above $50 million or global transaction value above $250 million.
Secondly, the ACCC will look at any merger involving a very large business with Australian turnover more than $500 million buying a smaller business or assets with Australian turnover above $10 million.
Finally, to target serial acquisitions, all mergers by businesses with combined Australian turnover of more than $200 million where the cumulative Australian turnover from acquisitions in the same or substitutable goods or services over a 3-year period is at least $50 million will be captured, or $10 million if a very large business is involved.
Land acquisitions involving residential property development and certain commercial property acquisitions won't be included to avoid clogging up the system with simple land acquisitions unless they are captured under other notification requirements.
In addition, the legislation provides flexibility to allow the Treasurer to adjust and calibrate the thresholds to respond to evidence-based concerns from the ACCC about high-risk mergers, like in the supermarket sector.
These thresholds are all about striking the right balance between creating a rigorous and robust regime that can capture all risky mergers without calling in every merger. The thresholds will be reviewed 12 months after coming into effect, to ensure they are working as intended.
The new system will allow the ACCC to review all the mergers that they have been typically concerned about, not just some.
It will take a more targeted approach that allows the ACCC to focus its efforts on the mergers that really matter.
We want to see the majority of mergers approved quickly, so the ACCC can focus on the minority that give rise to competition concerns. The ACCC has committed to this, with an expectation around 80 per cent of mergers will be approved in 15 to 20 business days.
That's because we understand that most mergers have genuine economic benefits and are an important feature of any healthy, open financial system.
Last year, over 1,400 mergers were recorded, at a value of around $300 billion.
They can attract capital, re‑tool businesses and improve the uptake of new technologies.
They can allow businesses to achieve greater economies of scale and scope, to access new resources, technology and expertise.
This can flow through to consumers via greater product choice and quality as well as lower prices.
But some mergers can cause serious economic harm.
This can happen when businesses are not interested in improving profitability by lifting productivity.
When they're solely focused on squeezing out competitors to capture a larger percentage of the market.
This can strangle innovation, reduce productivity in our economy and punish consumers with reduced choice.
We've developed this legislation and these thresholds through detailed consultation.
We're especially grateful for the input from the Expert Advisory Panel, comprising Kerry Schott, David Gonski, John Asker, Sharon Henrick, John Fingleton, Danielle Wood and Rod Sims.
We're also genuinely thankful for all the discussions and consultation we have held with businesses, the competition regulator, and the broader community, about the legislation.
As an example, we heard concerns about aspects of our draft legislation from the business community, including that parts of the review process were still too time‑consuming, and businesses wouldn't be able to access the evidence the ACCC relied on when making its decision.
We've addressed these issues in the updated Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024 we will introduce into Parliament on Thursday.
The Bill clarifies and provides certainty on timelines for ACCC assessment and limits the ability of the ACCC to stop the clock at various stages of the assessment process.
The Bill also now allows discretion for the Australian Competition Tribunal to permit parties to provide new information if relevant to the ACCC determination and they didn't have a reasonable opportunity to make submissions during the ACCC's review.
These new targeted and balanced merger rules are part of the Albanese Labor Government's substantial and broad competition reform agenda, which is all about creating a more dynamic, more productive and resilient economy.
They build on actions we've already taken, like revitalising National Competition Policy with states and territories, abolishing 500 nuisance tariffs, our reforms to boost competition in the supermarket sector, and productivity enhancing reforms to planning and zoning around the country.
This agenda will help expand choices, lift living standards and grow our economy.
It will help ensure that our people, businesses and industries are beneficiaries of the opportunities before us in the defining decade ahead.
This article was first published as Government has listened to concerns on merger law reform in The Australian Financial Review.
