Australian Merger Reforms

• "Australian revenue" refers to the entity's gross revenue that is attributable to transactions or assets within Australia, or transactions into Australia, determined in accordance with accounting standards for the entity's most recently ended 12-month financial reporting period.
• The meaning of "connected entity": Two entities will be connected where (i) they are related bodies corporate or; (ii) one controls the other, or (iii) they are both controlled by the same third entity. An entity is related to the first entity where it is the holding company (i.e. parent) or subsidiary of the first body corporate, or if both the first entity and the second entity are subsidiaries of the same holding company (i.e. owned by the same parent). Control is interpreted consistently with section 50AA of the Corporations Act 2001 (Cth) but amended to include joint control by associates; as well as provisions for special purpose vehicles and subsidiaries.
• Calculating the "Target's Australian revenue": To calculate the Target's Australian revenue for use in the above thresholds:
  • Where the acquisition is of shares in a body corporate – use the Australian revenue of the body corporate.
  • Where the acquisition is of an asset and the acquisition has the effect that a person will, or can, acquire all, or substantially all, of the assets of a business – use the Australian revenue of the Target to the acquisition to the extent it is attributable to the business.
  • Where the acquisition is of an asset and the acquisition does not have the effect that a person will, or can, acquire all, or substantially all, of the assets of a business, the revenue of that asset will not be attributed to the Target. Instead:
    • From 1 January 2026, where the combined Acquirer / Target Australian Revenue is ≥$200 million - the $250 million transaction value threshold will continue to apply; and
    • From 1 April 2026 additional (lower) transaction value thresholds will also apply:
      (A) Where the combined Acquirer / Target Australian revenue is ≥$200 million – the global transaction value is ≥$200 million; and
      (B) Where the Acquirer's Australian revenue is ≥ $500 million - the global transaction value is ≥$50 million.

    See also the notes below about connected entities to include in this calculation.

• Which connected entities are included in revenue calculations: The Australian revenue of the Acquirer's connected entities is included in the Acquirer's revenue calculations. The Australian revenue of the Target's connected entities is included in the Target's revenue calculations if those entities are being indirectly acquired through the acquisition.
• No double counting: Australian revenue of a controlled entity should not be included in the calculation if the revenue is included in the parent entity's consolidated Australian revenue.
• What to include in revenue calculations for acquisitions in past 3 years: 2(d)(ii) and 2(e)(ii) above will include Australian revenue from previous acquisitions by the Acquirer in the past 3 years predominantly involving goods or services that are substitutable for (i.e. competitive with) the current shares or assets being acquired, disregarding geographical factors. The relevant date for calculation of this Australian revenue from previous acquisitions is the contract date for those acquisitions. However, the following should be excluded from this cumulative calculation:
  (a) acquisitions where the Target's Australian revenue (or the market value of the asset if the asset was not all or substantially all of the assets of a business) was <$2 million when the acquisition was put into effect;
  (b) acquisitions of shares not resulting in control, or which have been subsequently divested;
  (c) acquisitions of assets that have been subsequently disposed of;
  (d) acquisitions of assets that are not all or substantially all of the assets of a business;
  (e) acquisitions individually notified under the new regime (i.e. other than because of the previous operation of the serial acquisitions calculations); and
  (f) acquisitions not connected with Australia.

"Transaction value" refers to the consideration received or receivable for all the shares and assets being acquired; or to the sum of the market values of all the shares and assets being acquired.

• In an acquisition of shares in the capital of a body corporate, if the acquirer already has control of the Target prior to the acquisition (including joint control), or does not have control after the acquisition, the acquisition is not individually notifiable (also known as the "control exemption"). Put differently, if an acquisition of shares results in the Acquirer obtaining control over the Target, notification will be required (if the acquisition meets the thresholds). Changes will be made to this element from 1 April 2026, with the result that certain acquisitions will need to be notified despite the Acquirer not obtaining control. See below.
• Control refers to the capacity of one entity to determine the outcome of decisions about another entity's financial and operating policies. It is the practical influence that a person can exert (rather than the rights they can enforce) that is the issue. A practice or pattern of behaviour affecting a body corporate's financial or operating policies is relevant, even if it involves a breach of agreement or trust.
• Control is interpreted consistently with section 50AA of the Corporations Act 2001 (Cth) but amended to include joint control by associates; as well as provisions for special purpose vehicles and subsidiaries.
• From 1 April 2026, the control exemption will be qualified. If the thresholds are met, notification will also be required in the following circumstances, even where control is not acquired:
  • in any non-Chapter 6 entity - increasing voting power from 20% or below to more than 20%;
  • in any body corporate - increasing voting power from a starting point of 20% to 50%, to an end point that is 50% or more;
  • in a Chapter 6 entity - increasing voting power from 20% or below to more than 20% (where you already had control); or
  • in a Chapter 6 entity - increasing voting power from below 20% to 50% or more (without control either before or after the acquisition).
• In non-Chapter 6 entities, someone's voting power includes their voting power and the voting power of their associates. However, this does not include the votes of entities who are associates only because they have entered into an agreement with minority shareholder protection rights.
• Acquisitions of less than 20% of voting power in a Chapter 6 entity is subject to a safe harbour and does not require notification.

Acquisitions of interests in land, including entry into leases (and agreements for lease) do not require notification if they are in the "ordinary course of business" and not subject to targeted notification requirements (currently limited to major supermarkets).

The concept of "ordinary course of business" has been interpreted as relating to the ordinary course of business generally, not the particular business of the Acquirer. Accordingly, some land transactions may still require notification if they meet the thresholds. However, there are also a number of exemptions that may apply in relation to land and leases, including:

• lease extensions and renewals;
• acquisition of land for the purpose of developing residential premises;
• certain commercial property acquisitions by businesses primarily engaged in buying, selling, leasing or developing land, where the acquisition is for a purpose other than operating a commercial business on the land (unless that is ancillary to the primary purpose);
• "land entities" – acquisitions of interests in entities that only hold land assets and the interest in a special purpose vehicle established and maintained for the purpose of financing a land project, where certain conditions are met;
• subsequent acquisitions of legal or equitable interests in land (or a quasi-land right) where the same acquirer has previously notified the ACCC or obtained a waiver in relation to an acquisition of an equitable interest in the same land/ quasi-land right (to avoid multiple notification of acquisitions that take place in several stages) where certain conditions are met;
• acquisitions of land development rights (including a right to develop or redevelop land, and rights to construct, refurbish, expand or subdivide existing land buildings) which would be exempt (under the other land exemptions) if the development rights were an equitable interest in land;
• sale and leaseback arrangements relating to land (typically used for financing or capital management purposes); and
• certain acquisitions of legal or equitable interests in land where the acquirer previously acquired an equitable interest in the land prior to 1 January 2026, where certain conditions are met.

In addition to the various land exemptions noted above, there are a number of other important exemptions to notification.

These include carve-outs in relation to control (see above); internal restructures; certain ordinary business transactions (other than acquisitions of patents); certain acquisitions of shares in Chapter 6 entities; various financial market arrangements and more.

Parties should seek legal advice before relying on any of these as they are highly technical.

• In addition to the general notification thresholds above, an acquisition will be required to be notified to the ACCC if it belongs to a class of acquisitions determined by the Minister.
• To date, this is limited to acquisitions by major supermarkets (Coles Group Limited and Woolworths Group Limited and their connected entities) of supermarket businesses and land for supermarket businesses (where it meets certain requirements).
• Control is not required in relation to supermarket acquisitions.
• The exception to notification for acquisitions of land in the "ordinary course of business" does not apply for supermarket acquisitions.