As Australia begins to implement the changes to its merger control regime, businesses planning mergers or acquisitions must understand the new rules and transition mechanisms to avoid delays, penalties, or regulatory surprises. Here's a breakdown of the key developments and what they mean for your deal.

This update follows Sierra Legal’s earlier commentary on the merger reforms, including:

• ACCC consults on new merger assessment guidelines – A step towards greater transparency and predictability
• Major overhaul in Australian merger control: what businesses need to know

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Recap: What’s Changing?

From 1 January 2026, parties to qualifying mergers must notify the Australian Competition and Consumer Commission (ACCC) and obtain clearance prior to completion. This marks a shift from the current informal clearance system to a more structured, mandatory process.

Key features of the new regime include:

• Notification thresholds based on turnover and transaction value.
• Short-form and long-form notifications, depending on the complexity and nature of the transaction.
• Mandatory notification for certain acquisitions, even if thresholds are not met.
• Continued application of the “substantial lessening of competition” test, even for deals below the thresholds.
• A move to a user-pays model, with the introduction of a tiered fee structure aligned to transaction value and complexity.

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Notification Thresholds Explained

The thresholds aim to capture transactions that may raise competition concerns, and the ACCC has the authority to review these acquisitions under the substantial lessening of competition test.

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1. Acquisitions Resulting in Larger Corporate Groups

Applies to:

• Acquisitions that create or expand large corporate groups with significant market presence.

Thresholds:

• The shares or assets to be acquired are connected with Australia; AND
• The combined Australian turnover of the acquirer and target (including connected entities) is at least $200 million; AND
• Either:
  
  • The target’s Australian turnover (including connected entities) is at least $50 million; OR
  • The transaction value is at least $250 million.

Purpose:

• To ensure transactions creating or expanding large corporate groups are subject to ACCC scrutiny, especially where they may substantially lessen competition.

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2. Acquisitions by Very Large Corporate Groups

Applies to:

• Acquisitions made by dominant or highly influential corporate groups with significant Australian turnover.

Thresholds:

• The shares or assets to be acquired are connected with Australia; AND
• The acquirer’s Australian turnover (including connected entities) is at least $500 million; AND
• The target’s Australian turnover (including connected entities) is at least $10 million.

Purpose:

• To capture transactions where a very large corporate group acquires smaller players, ensuring even lower-value acquisitions by dominant entities are reviewed for competition concerns.

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3. Creeping or serial acquisitions – Tier 1

Applies to:

• Acquirers with a combined Australian turnover of at least $200 million (including connected entities).

Thresholds:

• The shares or assets to be acquired are connected with Australia; AND
• The combined Australian turnover of the acquirer and target (including connected entities) is at least $200 million; AND
• The cumulative Australian turnover from acquisitions by the acquirer (including connected entities) over the past three years, relating to the same or similar goods or services, is at least $50 million.

Purpose:

• Captures cumulative acquisitions by large, but not necessarily dominant, corporate groups that could progressively increase market power through smaller transactions over time.

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4. Creeping or serial acquisitions – Tier 2

Applies to:

• Very large acquirers with Australian turnover of at least $500 million (including connected entities).

Thresholds:

• The shares or assets to be acquired are connected with Australia; AND
• The acquirer’s Australian turnover (including connected entities) is at least $500 million; AND
• The cumulative Australian turnover from acquisitions by the acquirer (including connected entities) over the past three years, relating to the same or similar goods or services, is at least $10 million.

Purpose:

• Designed for very large corporate groups with significant market presence, capturing even smaller creeping acquisitions that, due to the acquirer’s scale, could still pose competition risks.

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5. Targeted Sectors

Applies to:

• Certain industries or sectors that are strategically significant or prone to competition risks.

Current Application:

• This threshold specifically applies to acquisitions by Coles and Woolworths, and their connected entities, reflecting the significant market power held by these two major supermarket groups.

Purpose:

• To enable the ACCC to closely scrutinise acquisitions by dominant players in the grocery retail sector, addressing concerns over market concentration and protecting competition, suppliers, and consumers.

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Calculating Australian turnover

Australian turnover is defined as follows:

• For a corporate entity: The entity's gross revenue attributable to Australia, calculated in accordance with relevant accounting standards, based on the entity's most recent 12-month financial reporting period. This includes revenue generated from transactions or assets located within Australia or sales made into Australia.

• For assets: The Australian turnover directly attributable to the asset. If it is not reasonably practicable to determine turnover for the asset, a default value of 20% of the asset's market value is used as an estimate of Australian turnover.

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Exemptions

Certain classes of acquisitions are exempt from the mandatory notification requirements. These include specific types of land acquisitions, particular financial and securities transactions, and acquisitions that occur by operation of law.

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Fees and Notification Waivers

Understanding the cost implications of the new regime is essential for budgeting and planning.

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Fees for 2025–26

Notification Waiver Application – $8,300

• Only available from 1 January 2026 (and the details are not yet available).
• This applies where parties seek an exemption from mandatory notification.
• Typically relevant for mergers that clearly fall below competition thresholds or raise no substantive competition concerns.

Phase 1 Review – $56,800

• This is the initial review stage for all notified mergers.
• The ACCC will assess whether the proposed merger raises any prima facie competition concerns.
• A decision is generally expected within 30 working days of a valid notification.
• Voluntary notification available from 1 July 2025.

Phase 2 Review – $475,000 to $1,595,000

• Fee is dependent on the greater of the market values of the shares/assets acquired or the consideration payable at contract date, being:
  
  • Up to $50 million - $475,000.
  • Between $50 million and $1 billion - $855,000.
  • Over $1 billion - $1,595,000.
• Reserved for mergers raising complex or serious competition concerns.
• The statutory decision timeframe is 90 working days (subject to extensions).
• The ACCC expects only a small proportion of notified mergers to advance to this stage.

Public Benefit Application – $401,000

• Parties may also apply for merger clearance based on net public benefit grounds, particularly where the merger is likely to substantially lessen competition.
• This application triggers a separate review process by the ACCC to evaluate whether the likely public benefits outweigh the likely public detriments.
• The fee reflects the ACCC’s additional work in weighing economic, social, and efficiency considerations.

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Cost Implications

The introduction of substantial, non-refundable filing fees, particularly at the Phase 2 and public benefit stages, means that merger review costs will now need to be factored into early commercial planning and transaction budgets.

While the small business fee waiver (see below) offers some protection, it remains subject to eligibility and approval. As a result, businesses should now treat merger filing fees as a core financial consideration, alongside legal, tax, and due diligence costs, when evaluating proposed acquisitions.

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Small Business Fee Waiver

Recognising the potential financial burden of notification fees on smaller transactions, the new merger notification regime offers a fee exemption for eligible small businesses.

Under this regime, small businesses are exempt from paying notification fees when submitting notifications, applications, or related documents to the ACCC.

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To qualify for this exemption, the following criteria must be met:

• Single Notifying Party: The notifying party must have an aggregated turnover of less than $10 million for the income year that includes the transaction date.
• Multiple Notifying Parties: Each notifying party must have an aggregated turnover of less than $10 million for the income year that includes the transaction date.

When these conditions are met, the fee for the notification or application is waived, effectively relieving eligible small businesses of this regulatory cost.  In practice, this exemption is likely to only apply where a small business is acquiring a much larger business.

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Transition

The new mandatory merger notification regime takes effect on 1 January 2026. Businesses planning acquisitions during the transition period (1 July to 31 December 2025) must carefully plan how they engage with the ACCC.

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Options for Engagement During the Transition Period

• Continue using the current informal merger review process
  
  • Early engagement is essential to allow enough time for review. Requests made after early October 2025 may not be completed before the new regime starts.
  • If no decision is made by 31 December 2025, and the acquisition meets the notification thresholds, it must be notified under the new regime.
• Voluntarily notify under the new merger control regime:
  
  • This option involves applicable fees but offers greater certainty on assessment timeframes.
  • If a decision is not made by 31 December 2025, businesses will not need to re-notify when the mandatory regime takes effect on 1 January 2026.

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Key Points to Remember

• Acquisitions cleared by the ACCC between 1 July and 31 December 2025 under the informal process will be exempt from notification under the new regime, provided they are completed within 12 months of clearance.
• Acquisitions not completed by 1 January 2026, or those without informal clearance by that date, must comply with the new mandatory notification and approval requirements if thresholds are met.
• For acquisitions cleared before 1 July 2025 but not completed until after 1 January 2026:
  
  • You can request an updated informal view from the ACCC from 1 July 2025.
  • The ACCC recommends submitting this request as early as possible to avoid delays.
  • If the ACCC maintains its original position, you will receive a formal letter confirming no action will be taken under section 50.
  • This letter exempts the acquisition from mandatory notification, provided completion occurs within 12 months of the letter's date.
• Informal clearance requests made in 2025 but not finalised by 31 December 2025 will require re-notification under the new regime if thresholds are met.

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Strategic Considerations for Clients

• Start Early: Engage with the ACCC as early as possible—well before signing—to assess competition risks, prepare necessary documentation, and avoid delays in transaction timelines.
• Review Past Acquisitions: The new serial acquisition thresholds require businesses to account for cumulative turnover from acquisitions over the past three years, particularly in the same or similar markets.
• Consider Foreign Investment Implications: Where Foreign Investment Review Board (FIRB) approval is required, ACCC consultation may form part of the process. Ensure merger clearance and foreign investment considerations are managed in parallel.
• Factor in Costs: The new user-pays model introduces tiered filing fees based on transaction value and complexity. Clients should budget for these regulatory costs early in the transaction process to avoid unexpected financial impacts.

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Final Thoughts

The merger reform process introduces clearer rules and a more structured assessment framework, but it also requires businesses to adopt a more proactive approach to planning and deal execution. Businesses should consult legal and competition experts early to navigate the transition smoothly and ensure compliance with the new regime.

If you’re considering a merger or acquisition and would like to understand how these changes might impact your transaction, please get in touch. We’re here to help you navigate the evolving regulatory landscape.

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