The Law
Mergers
About mergers in Australia
In Australia mergers are prohibited if it can be demonstrated that they will have the effect or likely effect of substantially lessening competition in a market (section 50 CCA). It is possible to obtain clearance (formal or informal) or authorisation for proposed mergers, but there is no mandatory notification process.
Clearance will be granted only if the ACCC does not believe the merger will SLC (s 95AN). Authorisation, on the other hand, may be granted by the Australian Competition Tribunal even where the merger will SLC if it can be demonstrated that the merger would lead to such a benefit to the public that it should be allowed to occur (s 95AZH).
Section 50A deals with mergers occurring outside Australia.
History of merger regulation in Australia
The original Trade Practices Act 1974 applied a substantial lessening of competition test - specifically, it prohibited the acquisition of assets and shares, which resulted in a substantial lessening of competition in a market for goods or services.
In 1977 the substantial lessening of competition test was replaced with a market dominance test by the Trade Practices Legislation Amendment Act 1977. As a result, acquisitions were only prohibited where they resulted in or substantially strengthened a ‘position to control or dominate a market’. This was (generally) considered a higher threshold so that less mergers were captured.
In 1989, the House of Representative Standing Committee on Legal and Constitutional Affairs (the Griffiths Committee) recommended retaining the dominance test in its report ‘Mergers, Takeovers and Monopolies: Profiting From Competition?’.
Shortly thereafter, however, the Senate Committee on Legal and Constitutional Affairs (the Cooney Committee). It recommended that the test in s 50 be lowered to prohibit acquisitions or mergers that substantially lessen competition in a market. This change was introduced by the Trade Practices Legislation Amendment Act 1992 which also intorduced a provision for the substantial lessening of competition test in relation to trans-Tasman mergers and introduced a non-exhaustive list of matters to be considered by the Courts when determining if a merger substantially lessened competition (s 50(3))
In 2002, numerous submissions were made to the Dawson Committee recommending that the substantive test for mergers change back to one of dominance, incorporate an ‘efficiency’ test or incorporate a public benefit test. The Dawson Committee recommended that the substantive test of ‘substantial lessening of competition’ be retained. This was accepted by the government and no legislative change has been made to the substance of the prohibition.
The Dawson Committee did, however, make recommendations relating to merger clearance and authorisation processes that were introduced by the Trade Practices Legislation Amendment Act (No 1) 2006. For more details on the Committee's discussion of mergers and the submissions made to the Committee relating to mergers see: Julie Clarke, 'The Dawson Report and Merger Regulation' (2003) 8(2) Deakin Law Review 245
Following a push for the introduction of provisions to deal with creeping acquisitions, a bill was introduced in 2010 which would have made minor amendments to s 50 - the bill lapsed at the end of Parliament in 2010, but has was re-introduced as the Competition and Consumer Legislation Amendment Bill 2011. This bill has now passed through both Houses of Parliament and will make the following changes:
(1) replace the words 'a market' in section 50(1) with 'any market'
(2) Remove the requirement that a market, for purposes of the merger provision, be a 'substantial' market, by removing the word substantial from subsection 50(6)
These changes will commence on a single day to be fixed by Proclamation, but no later than 2 months from the day the Act receives Royal Assent (as a result the change will commence no later than 7 February)
The Law
Only key provisions are extracted - for full set of relevant provisions see the Act.
The Prohibitions (in Part IV Division 2)
50 Prohibition of acquisitions that would result in a substantial lessening of competition
50A Acquisitions that occur outside Australia
Merger clearances and authorisations
Part VIII, Division 3 - Merger clearances and authorisations
Subdivision B - Merger clearances
Cases relating to mergers
Australian Gas Light Company v ACCC (No 3) [2003] FCA 1525
ACCC v Metcash Trading Limited [2011] FCA 967 (25 August 2011)
Articles/books/thesis relating to mergers
See separate page
Reports
Australia
Dawson Committee Report - Chapter on Mergers (2003)
Cooney Committey Report (1991)
Mergers, Monopolies & Acquisitions
Griffiths Committee Report (1989)
Mergers, Takeovers and Monopolies: Profiting from Competition?
Report of the House of Representatives Standing Committee on Legal and Constitutional Affairs
Canada
Innovation and Dynamic Efficiencies in Merger Review (April 2007)
New Zealand
A Best Practice Review of the New Zealand Merger Clearance Regime (August 2007)
International
OECD - Dynamic Efficiencies in Merger Analysis (2007)
OECD - Report on Notification of Transnational Mergers (1999)
Merger Guidelines and Best Practices
Australia
ACCC Merger Guidelines (November 2008)
Final Guidelines released 21 November 2008 and replace the 1999 Guidelines
ACCC Formal Merger Process Guidelines (June 2008)
ACCC Merger Review Process Guidelines (July 2006)
New Zealand
Mergers and acquisitions guidelines
United Kingdom
OFT/CC Review of Merger Guidelines (initiated 2008; includes links to Guidelines)
United States
Pre-Merger/Hart-Scott-Rodino Act (resources from FTC)
Horizontal Merger Guidelines (August 2010 from DOJ site)
Horizontal Merger Guidelines (August 2010, PDF from FTC site)
Horizontal Merger Guidelines (April 1992, PDF from FTC; now replaced by 2010 Guidelines)
Horizontal Merger Guidelines (April 1992 from DOJ; now replaced by 2010 Guidelines)
Commentary on Horizontal Merger Guidelines (2006 Commentary on 1992 Guidelines - from DOJ site)
DOJ - Antitrust Division Policy Guide to Merger Remedies (June 2011)
DOJ Policy Guide to Merger Remedies (2004) (replaced by 2011 guide)
Commentary
Deborah L Feinstein, 'The Revised Merger Guidelines: Did the Agencies Heed the Lessons of the Past?', The Antitrust Source, (October 2010)
Europe
Guidelines on the Assessment of Horizontal Mergers (2004)
Commission Notice on the definition of relevant market for the purpose of Community competition law (1997)
International
ICN - Merger Guidelines Workbook (2006 PDF)
ICN - Guiding Principles and Recommended Practices for Merger Notification and Review Procedures
ICN - Recommended Practices for Merger Analysis (PDF)
ICN Member Merger Templates (merger websites and templates for Member States)
Useful links
International Competition Network - Mergers Working Group
ICN Database - Merger Review Laws, Related Materials, and Templates
Merger Remedies Matrix
Concurrences (Institute of Competition law) - Cases and Reports on merger remedies in Europe
Merger Streamlining Group
Group of
multinational firms 'interested in ensuring that the merger review regimes ... operate effectively and efficiently and do not impose undue compliance burdens.'