AUSTRALIA

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Content last updated: 12-11-2020

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  • Merger Control Regime
  • Merger Screening

2. Nature of merger control regime

2.1 Mandatory or voluntary

2.1.1 Is filing mandatory or voluntary?

Australia does not have jurisdictional thresholds and filing is voluntary.

See Section 2.3.1 under the Merger Screening for more information.

2.2 Suspensory effect

2.2.1 Must completion of the transaction await clearance by the relevant authorities?

Seeking clearance is voluntary. Hence, completion of the transaction does not have to await clearance by the Australian Competition and Consumer Commission.

1. What type of transactions are caught by the merger control regime?

1.1 Concentrations

1.1.1 Type of transactions that are caught by the merger control rules?

Any acquisition of shares or assets is applicable for review by the Australian Competition and Consumer Commission. On the contrary, the merger control regime does not apply if there is no acquisition of shares or assets.

1.2 Joint ventures

1.2.1 What types of joint ventures are caught by the merger control rules?

Joint ventures that involve an acquisition of shares or assets are subject to merger control. Joint ventures entered into purely on a contractual basis are not caught.

However, the formation of a joint venture may be prohibited under other provisions of the Competition and Consumers Act, including cartel conduct, concerted practices, and other anticompetitive arrangements.

1.3 Definition of "control"

1.3.1 How are the concepts of "control" and "change of control" defined?

There is no concept of “change of control” under Australian competition law.

1.4 Minority shareholdings

1.4.1 Are minority and other interests less than control caught by the merger control rules?

Yes. See the above sections.

2. Establishing jurisdiction for notification of mergers

2.1 Merging parties/undertakings concerned

2.1.1 Which undertakings are considered parties to the merger ("undertakings concerned") in the various types of transactions identified under Section 1.1.1 and 1.2.1.

Generally, the acquirer and the target and their subsidiaries are the undertakings concerned.

A subsidiary is generally an entity which is controlled by another entity.

However, control is defined broadly to be one where the parent

  • owns more than 50% of the share capital;
  • controls more than 50% of the voting rights at the entity’s general meeting; or
  • controls the entity’s board of directors.

Other factors that the Australian Competition and Consumer Commission may take into consideration for the assessment of effective control are:

  • the ownership distribution of the share capital;
  • the likelihood of exchange of sensitive information;
  • the company’s articles of associations and shareholders agreements, including e.g. veto rights;
  • any other relevant contracts or arrangements;
  • the composition of the board of directors; and
  • whether other shareholders are active or passive investors.

2.3 General thresholds

2.3.1 Threshold(s) for when a concentration must be notified under the general merger control regime?

Australian competition law does not provide jurisdictional thresholds determining whether a transaction is subject to merger control.

Any acquisition of shares or assets which has, or is likely to have, the effect of substantially lessening competition in a market in Australia is prohibited.

Consequently, the Australian Competition and Consumer Commission has jurisdiction to investigate any transaction by which the acquisition of shares or assets has the effect, or is likely to have the effect, of substantially lessening competition in any market in Australia.

However, the Australian Competition and Consumer Commission encourages notification in the following circumstances:

  • The undertakings concerned supply goods or services which are substitutable or complementary; and
  • The acquirer (or the merged entity) will have a market share exceeding 20% post-transaction.

2.4 Other national thresholds for ex ante merger control (e.g. sector-specific rules)

2.4.1 Relevant thresholds for sector-specific or other ex ante merger control rules?

Special rules apply to transactions within the following sectors:

  • Financial services
  • Media
  • Civil aviation
  • Shipping
  • Telecommunications

2.5 Foreign-to-foreign mergers

2.5.1 Do any exemptions, special thresholds etc. apply to foreign-to-foreign mergers, i.e. where none of the undertakings concerned is domiciled in the jurisdiction?

Foreign-to-foreign mergers are caught by the merger control regime if they involve entities incorporated in Australia or Australian citizens or persons ordinarily resident within Australia.

Foreign entities carrying on business within Australia may also be caught.

However, for a transaction that occurs entirely outside Australia to be caught by the merger control regime, it is a requirement that a controlling interest be obtained in order for the transaction to be reviewable in Australia. A controlling interest is obtained if the target becomes a subsidiary of the acquirer. For more information see Section 2.1.1 above.

3. Calculation and allocation of turnover, asset value, transaction value etc.

3.1 Relevant turnover

3.1.1 How is turnover defined (e.g. is income from other sources than "ordinary activities to be included, and how are rebates, taxes, internal turnover etc. treated)?

Not applicable.

3.3 Relevant undertakings for the calculation of turnover

3.3.1 The undertakings whose turnover is taken into account?

Not applicable.

3.3.2 Shall the turnover of the existing seller be included in the target's group turnover?

Not applicable.

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