06 Sep 2019

State of Play: Merger clearance trends and predictions

There have been a number of important changes and developments in the ACCC's merger processes in 2019. Hear from Kirsten Webb as she highlights the three key developments in the past six months, and the potential changes to Australian merger laws following the ACCC's recent report on its Digital Platforms inquiry released in July.

To learn more about the key market trends and latest legal developments in Australia, visit our
Australian Market: the state of play page.

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We've seen a number of changes and developments in the ACCC's merger processes in the last six months. We keep a track of statistics and how many mergers the ACCC is reviewing under its informal merger review process and how long it's taking.

In pre-assessment, which is not a very transparent process because the ACCC is considering largely on the papers whether or not it needs to do a public review, the ACCC has reviewed 79 mergers in the first six months of this year.

The ACCC's published guidelines give an indicative timeframe of 20 business days; we've seen pre-assessments taking increasingly much longer than that. For Phase 1 reviews, the ACCC is taking around the same time this year on average as it did last year: around 63‑68 working days for a Phase 1 public review. There have been eight of those that the ACCC has reviewed in the first six months of this year.

When we get to Phase 2 reviews, the ACCC is taking much longer to conduct a Phase 2 review. The average time in the first six months of this year is 87 days compared with 60-odd days last year, and we expect that the ACCC's timeframes for reviewing complex mergers aren't going to get any shorter.

In the last six months we have seen for the first time merger parties using a new formal authorisation process that was introduced into our law in 2017. That allows merger parties to formally seek authorisation by the ACCC, particularly where there is a public benefit that is said to arise from the merger. The first application was made and the merger authorised in July of this year on divestment conditions. Now that we have seen the first, it is perhaps likely that we will see more people coming forward to use that authorisation process.

The third important thing that we have seen in the last six months relating to merger laws and of broader importance is the ACCC's report on its Digital Platforms inquiry. The Government released that report in July of this year. That report makes wide-ranging recommendations concerning digital platforms. One of the recommendations that it makes is introducing some more mandatory factors into our merger clearance statutory test, requiring (if these factors were to be introduced) the ACCC and the court to take into account:

  • the removal of a potential competitor; and
  • the nature of assets to be acquired, including data and technology, whether they be acquired directly or within the corporate group.

While those two recommended changes are in the context of the Digital Platforms inquiry, if they were to be introduced into our merger law, they would be of general application across all sectors.

So there are three important developments that we have seen in the past six months, and what we expect to see in the coming six months is that merger reviews will continue to take longer, particularly the complex mergers. Hopefully we will see some more parties coming forward to use the formal authorisation process.

Unusually, there are two merger litigation matters before the Federal Court. Because merger litigation is relatively rare in Australia, any Federal Court decisions concerning the merger laws are very important and we will keep you updated as those matters progress.

Finally we'll see the Government's response to the digital platforms inquiry, including the recommended changes to merger laws, which is expected to be published at the end of this year.