ACCC mandatory merger regime: a practical guide to real estate exemptions

This year, Australia's merger control system underwent its most significant reform in half a century.

The Competition and Consumer Act 2010 (Cth) (CCA) now requires mandatory notification to the Australian Competition and Consumer Commission (ACCC) of all acquisitions of shares or assets (including land) connected with Australia, provided they meet certain thresholds for control and revenue. Unless an exemption applies, the acquisition cannot proceed until ACCC clearance or a waiver is obtained.

Failing to notify the ACCC about an acquisition that was required to be notified will lead to the transaction being automatically void, and could also also to significant civil penalties.

Since our last update, in welcome relief to the real estate industry, the exemptions available for real estate transactions have been expanded to capture a broader range of transactions in the ordinary course of business. This article summarises the key exemptions that may apply in the context of notifiable real estate transactions.

For guidance on the relevant thresholds and notification requirements, please see our Merger Regime Hub.

What exemptions apply to real estate acquisitions?

1. Land acquisitions in the ordinary course of business

Acquisitions of land that occur in the "ordinary course of business" are exempt from the mandatory notification requirement. The exemption covers routine acquisitions of a legal or equitable interest in land, whether freehold or leasehold, regardless of the transaction structure (including direct land acquisitions or acquisitions of shares or units in a land entity). However, this exemption does not apply to acquisitions by supermarkets.

Before the introduction of the new merger control regime, the ACCC reviewed certain acquisitions of land and entry into leases – principally by supermarkets – but, generally, acquisitions of land and entry into leases were considered to be in the ordinary course of business and, because of section 4(4)(b) of the CCA, were not treated as acquisitions for the purposes of section 50 (the prohibition on mergers or acquisitions that substantially lessen competition). Section 4(4)(b) provides that a reference to the acquisition of assets includes the acquisition of any legal or equitable interest in such assets, but does not include an acquisition by way of charge only or an acquisition in the ordinary course of business. As a result, section 50 did not apply to such acquisitions, although the rest of the competition law provisions (contained in Part IV of the CCA) continued to apply (and still do).

When the new merger control regime was introduced, it expressly provided that section 4(4)(b) did not apply to land acquisitions and entry into leases, so these transactions were treated as acquisitions for the purposes of the new regime. This position was subsequently amended to provide an exemption for land acquisitions and entry into leases in the ordinary course of business.

In practical terms, what is considered the "ordinary course of business" is ultimately a question of fact that looks to the broader industry and economic context, not the acquirer's particular business. The key question is whether the acquisition falls into place as part of the undistinguished common flow of business done in that industry: routine, unremarkable, and arising out of no special or particular situation.

It may be that an individual business does not routinely make similar acquisitions, but if other businesses in similar industry settings make similar acquisitions at a similar frequency, such acquisitions will be considered in the ordinary course of business. For example, a business entering into a new office lease may not have done so in 10 years, but the lease could still be exempt if similar dealings are routine in that industry. This objective, industry-wide framing means the exemption is not limited to experienced or repeat acquirers, and a business making a type of acquisition for the first time can still benefit from the exemption if such dealings are commonplace in its sector.

Examples of acquisitions in the ordinary course of business include (but are not limited to):

• acquiring land for the purpose of an office or headquarters;

• the acquisition of office towers for the purposes of commercial property investment;

• a property development company acquiring land to develop residential or commercial property;

• retailers leasing or acquiring land for a warehouse to store their inventory;

• a manufacturer leasing or acquiring land for a new manufacturing facility;

• an energy generator acquiring land for a solar farm; or

• an energy distributor acquiring land to build pylons on.

The Government has indicated that this exemption is not intended to cover acquisitions that are competitively sensitive or that go beyond routine dealings. In particular, it is not intended to cover:

• acquisitions of land for the purposes of land-banking (the purchase of undeveloped or land with the intention of holding it for future sale or development);

• land that a competitor is currently operating their business on (such as a supermarket buying the property in which a direct competitor is currently leasing); and

• the transfer of production or supply capacity from one competitor to another (such as a manufacturing business acquiring the lease of one of their direct competitors’ manufacturing facilities).

2. Acquisitions for the purpose of developing residential premises

Acquisitions of land for the purpose of developing residential premises are exempt from the mandatory and suspensory notification requirements. In practice, this means a property developer acquiring residential land will generally be covered first by the broader ordinary course of business exemption; with the exemption for the purpose of developing residential premises operating as a backstop where the ordinary course of business exemption does not apply.

Under the regime, residential premises means land or a building that:

• is occupied as a residence or for residential accommodation; or

• is intended to be occupied, and is capable of being occupied, as a residence or for residential accommodation.

Examples include houses, apartments, student accommodation and retirement villages.

3. Acquisitions by a business primarily engaged in buying, selling, leasing or developing land

Acquisitions of land by a land development or management business (a business primarily engaged in buying, selling, leasing or developing land) for any purpose are exempt from the notification requirement. Like the exemption for purpose of developing residential premises, this exemption was amended to apply only "to the extent not already covered by" the ordinary course of business exemption. The Explanatory Statement recognises that property developers and entities that lease land acquire land as their stock-in-trade - it is this characteristic (land as the business itself, rather than as a platform for another commercial activity) that justifies the exemption.

However, there is a carve-out for those instances where the purpose of the acquisition is to operate a distinct commercial business that is not ancillary or incidental to the primary purpose of buying, selling, leasing or developing the land.

For example, a land development business acquiring a site to subdivide and sell lots to purchasers would fall within the exemption. In contrast, acquiring land for another purpose, such as building and operating a data centre, would fall outside the exemption.

4. Acquisitions of land or certain quasi-land rights, where a previous acquisition of an equitable interest was notified by the same acquirer

This exemption is applicable only to acquisitions where a previous acquisition of an equitable interest in land or a quasi-land right (a mining, quarrying or prospecting right, a water entitlement, or a right in relation to land for forestry operations) was:

• notified;

• a notification waiver was granted; or

• the previous acquisition occurred prior to 1 January 2026.

However, it only applies if:

• for interests in land – the size of the land to which the interests relate are materially the same;

• for quasi-land rights - the entitlements of the right are materially the same; and

• the proportion of the ownership interest in land or the right is the same.

The exemption is designed to capture routine follow-on dealings such as land title changes, easements, boundary adjustments or the registration of a strata plan. For example, if an entity enters into an agreement for lease prior to 1 January 2026, the actual acquisition of the land upon entering into the lease does not require a separate notification provided the land remains unchanged.

5. Land development rights

Where a land development right relates to a transaction that would otherwise qualify for one of the other property exemptions listed above, the acquisition of that right is also exempt.

Land development rights include rights to develop, redevelop, or subdivide the land, such as rights to construct, development consents/permits and planning approvals. However, this only applies to the extent the land development rights relate to purposes covered under another property exemption under the regime, being:

• acquisitions for the purpose of developing residential premises,

• acquisitions by a business primarily engaged in buying, selling, leasing or developing land,

• acquisitions of land or certain quasi-land rights, where a previous acquisition of an equitable interest was notified by the same acquirer,

• lease extensions and renewals,

• sale and leaseback arrangements, and

• land entities.

6. Lease extensions and renewals

Extensions or renewals of an existing lease are exempt from notification, provided the changes in lease term do not materially alter competitive conditions or affect the relevant parcel of land.

For example, where an option to renew a lease is exercised or a lease is terminated and a new lease is granted over the same land, the exemption may apply. However, the exemption will not apply where the renewal or extension involves a new or expanded parcel of land. If the renewed lease adds or removes certain rights, such as granting exclusivity rights over certain amenities, then the renewal may fall outside the scope of the exemption and require notification to the ACCC.

7. Sale and leaseback arrangements

If an acquisition of land relates only to an arrangement for its sale and lease back to the vendor, it will be exempt from mandatory notification. This exemption does not cover any ancillary or additional acquisitions.

For example, if a supermarket group sells the freehold title of a distribution centre to a purchaser and enters into a lease to continue operating the centre, this arrangement would fall under the exemption.

8. Land entities

This exemption relates to the acquisition of an entity, including shares, rather than an acquisition of land. However, it is relevant to real estate acquisitions as it applies where the entity's only non-cash asset is an interest in land for the purposes of developing residential premises or trading and developing the land. The Minister may also determine targeted notification requirements for specific classes of acquisitions. Where an acquisition falls within a specified class, the land exemptions described above are disapplied – meaning the acquisition must be notified regardless of whether it would otherwise be exempt. Currently, targeted class notification requirements apply to certain categories of acquisitions (including certain land acquisitions above specified size thresholds) by the major supermarkets – Coles and Woolworths (and their connected entities). This supermarkets class is subject to a five-year sunset provision.

Examples of property transactions notified under the new regime

Since the introduction of the regime, a range of property transactions have been notified to the ACCC for review, including:

• Acquisition of a full-service marina and industrial facility: MA Financial Group notified the acquisition of 100% of the real property and business assets (both tangible and intangible) of Gold Coast City Marina in Coomera, Queensland.

• Option to lease industrial land for development: Element Zero notified an option to lease part of the Boodarie Strategic Industrial Area in WA, to enable the development and operation of a green iron production facility.

• Lease of commercial land for defence manufacturing: Kongsberg Defence notified the lease of commercial land adjacent to Newcastle Airport for the establishment of a missile manufacturing and maintenance facility.

• Acquisition of hotel and leasehold interest in land: Experience Australia Group notified the acquisition of the Kakadu Crocodile Hotel in Jabiru, Northern Territory, including a 100% leasehold interest in the land on which the hotel is situated.

Consequences of non-compliance

Where an exemption applies, notification to the ACCC is not required.

Where no exemption applies and the acquisition is notifiable, the consequences for failing to notify are severe.

A notifiable acquisition that has not been notified, or has been notified but has not yet been finally considered (that is, the ACCC has not yet made a final decision to grant clearance or a waiver), is stayed, and cannot be put into effect. If such a transaction is put into effect, it will be automatically void, and severe monetary penalties may be imposed.