The federal government has introduced legislation to reform Australia’s merger and acquisition landscape, promising to promote competition while also minimising “unintended impacts” on small businesses and startups.
Treasurer Jim Chalmers on Thursday tabled the Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024 in the House of Representatives, the latest step in the government’s pledge to give the Australian Competition and Consumer Commission (ACCC) more power to oversee, approve, or reject corporate mergers.
“It outlines the biggest reforms to Australia’s merger settings in almost 50 years,” Chalmers told Parliament.
“It will create a regime that more efficiently and effectively targets mergers that are anti‑competitive, while allowing mergers that are pro‑competitive to proceed faster.”
Between 1,000 and 1,500 mergers take place in Australia every year, but only 330 are brought to the ACCC for consideration under the current voluntary notice scheme.
The new legislation would change that.
From January 1, 2026, companies hoping to acquire or merge with a target company would need to notify the ACCC of their plans if the value of those mergers hits certain thresholds.
In the first instance, the ACCC would consider any merger where the combined Australian annual turnover of the businesses is above $200 million, and either the target business or its assets have Australian turnover above $50 million, or global transaction values over $250 million.
Secondly, the ACCC would step in if a major business with annual turnover exceeding $500 million plans to acquire a smaller business with Australian turnover or assets exceeding $10 million.
Finally, the government also wants to give the ACCC powers to halt ‘creeping acquisitions’, where an acquiring company scoops up a number of smaller entities.
The federal government is concerned these types of acquisition can roll numerous mergers, which might not reduce market competition in and of themselves, into a larger and potentially damaging package.
Mergers by businesses with a joint Australian turnover of $200 million or more would need to alert the ACCC if the cumulative value of relevant acquisitions, in similar fields and over a three-year period, exceeds $50 million.
To stop the biggest businesses cherry-picking tiny competitors before they reach scale, major businesses would also need to alert the ACCC if the three-year turnover total exceeds $10 million.
The ACCC has welcomed the proposed legislation.
In a statement, ACCC chair Gina Cass-Gottlieb said the watchdog will take a “risk-based approach, with resources prioritised to acquisitions more likely to harm the community,” should the changes become law.
The ACCC also said proposed transparency measures would allow small businesses to comment on mergers that could affect them.
While the federal government says giving the ACCC greater powers will benefit market participants, many small business and startup founders consider the sale of their business to a major company as their preferred exit strategy.
Explanatory materials, packaged with the legislation, show the federal government believes reforms could limit anti-competitive ‘creeping acquisitions’ without limiting options for smaller businesses.
“This is a targeted measure to address concerns that some businesses are engaging in anti-competitive roll-up strategies that increase prices and reduce quality and choice for consumers, yet minimise unintended impacts on Australia’s vibrant start-up and small-and-medium enterprise sector,” it says.
Using the new merger and acquisition alert system would also come at a cost, with Treasury expecting businesses expected to stump up between $50,000 and $100,000 in most instances.
However, small businesses will be exempt from such fees.
Under the mandatory and suspensory system being put forward, “an exemption from fees will be available for small business so that the fees are not a disproportionate burden for those businesses,” the explanatory materials say.
The legislation will also give the Treasurer the power to adjust the thresholds over time, in response to ACCC concerns.
Chalmers said the government already plans to use this power to bring all proposed mergers in the supermarket sector to the ACCC for its sign-off.
“We want to make sure supermarket mergers don’t come at the cost of Australians, families and pensioners getting a fair price on their grocery bills,” Chalmers said.
“Our merger reforms will help ensure our supermarkets are as competitive as they can be so Australians get the best prices possible.”
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Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
