Mandatory merger rules are now set

The final ground rules for Australia’s mandatory, suspensory merger notification regime are now set following the Australian Government’s registration of the Competition and Consumer (Notification of Acquisitions) Amendment (2025 Measures No. 1) Determination 2025 (the Amendment Determination).

The Amendment Determination provides welcome, but incomplete, relief to acquisitions of interests in land and other targeted exemptions. It also tightens how thresholds apply, especially for asset acquisitions, but also introduces notification requirements, subject to the gateway financial thresholds being met, for particular shareholding movements that don’t otherwise confer ‘‘control’’.

With the mandatory regime being an unavoidable reality from 1 January 2026, and transactions still being automatically void if they are not submitted and cleared when they should be, deal parties and potential acquirers of shares, units and assets, should ensure that they build scope into their transactions to allow for this regime. At the very least, it is advisable to be conscious of the gateway thresholds and provide space for assessing whether the mandatory notification requirements, or an exemption, will apply.

The headlines

• Shifts in voting power over and above 20% may require notification: From 1 April 2026, even if the acquirer does not obtain, or already has, ‘control’ in a corporation, certain shifts in voting power over and above 20% will, subject to the general notification thresholds being met, need to be notified.
• ‘‘Connected entities’’ refined: The concept of ‘connected entity’, which is relevant for determining when thresholds are met, has been refined to exclude, in certain circumstances, those who would be regarded as associates merely because they have ‘minority shareholder protection rights’.
• Land exemptions: The Amendment Determination provides an ‘ordinary course of business’ exemption, and progressive acquisition relief to staged transactions, for land and ‘quasi-land’ rights, arising from an initial equitable interest. This will mean most land dealings will not, of themselves, require notification. The supermarket class determination will, however, continue to apply. In both respects though, where an equitable interest was acquired before 1 January 2026 (e.g. under an agreement for lease) and the later acquisition (e.g. the leasehold interest itself) occurs after that date, the later acquisition will, subject to the conditions about same parcel and same ownership proportions, be exempt from mandatory notification.
• Discrete asset acquisitions: Where buying discrete assets that don’t amount to a whole business acquisition, new notification thresholds will apply from 1 April 2026.
• Serial acquisitions: Additional transactions and assets will be excluded from the formula for determining accumulated transactions.
• Financing, financial markets, external administration and superannuation: Most financing and risk‑management steps will stay outside the notification regime unless they confer or enable control. For structured finance, securitisations are broadly exempt. There has also been clarification and improvements in the exemptions for external administration functions and certain superannuation events.

Analysis

‘Non‑control’ shareholding movements must still be notified

The Government’s previously expressed desire to ensure that the ACCC has visibility of deals that may materially shift influence, even where they do not cross the legal ‘control’ line, will come to fruition.

With effect from 1 April 2026, certain transactions that meet a general financial threshold but do not currently satisfy the current ‘control’ requirement must nevertheless be notified. The intent is to ensure that material shifts in influence – using voting power as a proxy for material influence – are visible to the ACCC when the transaction is of sufficient size. As a result, there will be four additional classes of share acquisitions that must be notified to the ACCC, even if the acquisition does not result in a change in statutory ‘control’.

The four classes are as follows:

• Unlisted, not-widely held entities: Voting power moves from ≤20% to >20%

Broadly speaking, notification will be required if a person’s voting power moves from 20% or below to more than 20% in a non‑Chapter 6 entity or an entity that is not listed on an approved foreign stock exchange.

Here, 20% is treated as a proxy for material influence in concentrated/private ownership structures and aligns also with concepts in the Foreign Acquisitions and Takeovers Act 1975.

The concept of ‘voting power’ is not straight forward and will be affected also by the ‘minority shareholder protection rights’ carve out canvassed below.

• All entities: Voting power moves from ≥20% to ≥50%

Notification will be required if voting power in any body corporate increases from 20% or more to 50% or more.

The rationale is that crossing to voting power of at least 50% represents a qualitative leap in governance power.

This will also be affected by the ‘minority shareholder protection rights’ carve out canvassed below.

• Chapter 6 entities:
  • Already‑controlled by the principal party and voting power moves from ≤20% to >20%

Where the principal party already controls the Chapter 6 entity before the acquisition, notification is required if voting power moves from 20% or below to more than 20%.

The intention of this class is to prevent a scenario where a party controlling a listed/widely‑held company below 20% could creep past 20% without notification because the Chapter 6 exemption applies below 20% and subsequent acquisitions would potentially be exempt if the acquirer were taken to be already controlling the entity.

• Not controlled by the principal party before or after the acquisition and voting power moves from <20% to ≥50%

For Chapter 6 entities, if the principal party does not control the target before or after the transaction, but voting power moves from less than 20% to 50% or more, the acquisition is notifiable where the monetary thresholds are met.

The rationale for this class is that the ACCC will have visibility of step changes in governance power.

This impact of these changes is most likely to be felt in private companies and other entities that are not-widely held. Transaction parties will need to build in capacity to assess whether their transaction is impacted

‘Minority shareholder protection rights’ carve outs

The Amendment Determination will exclude from the concept of ‘connected entity’ those who are ‘associates’ merely because an entity holds ‘minority shareholder protection rights’ through a ‘relevant agreement’.

This carve out will be relevant in two situations:

• When determining whether the notification thresholds are met, the Australian revenue of those entities who may otherwise be ‘connected’ will not need to be aggregated.
• In calculating changes in voting power, other than in the two explicit Chapter 6 scenarios described above, voting power of those entities who may otherwise be ‘associates’ will not need to be aggregated.

Note that this carve out will only apply to unlisted bodies corporate that are not widely held. The intended effect is that a person (‘first person’) will not be an associate of another person (‘second person’) in a private company, of 50 shareholders or less, merely because there is an agreement that provides the first person with minority shareholder protection rights. Accordingly, if the first person is afforded additional rights that enables ‘control’, the carve out will not apply. Further, a Chapter 6 entity will still need to aggregate minority interest holders if those minority holders would meet the definition of ‘connected entity’.

‘Minority shareholder protection rights’ are defined as rights consistent with the rights that are normally accorded to minority shareholders, in order to protect their financial interests as investors, and are reasonably appropriate and adapted to achieving the purpose of protecting a minority shareholder’s financial interests, in their capacity as an investor (and not for some other purpose) but do not include the capacity to control or practically influence (whether alone or in concert with others) the composition of a company’s board, the appointment or termination of senior managers of a company, nor a company’s financial and operating policies.

This should therefore capture the likes of shareholders agreements that afford protections from changes to a company’s constitution or capital, or the liquidation, sale or winding up of the company, and afford other rights such as access to information consistent with a minority shareholder’s investment, or board representation or observer rights.

Land and quasi‑land: ‘ordinary course’ and progressive transaction relief (including pre‑2026 grandfathering)

• Ordinary course of business:

Acquisitions of interests in land that occur in the ordinary course of business will be exempt from the notification regime. This reverts to the traditional policy principle that ordinarily excluded from the merger regime acquisitions of assets in the ordinary course of business. The targeted class for major supermarkets will continue to apply.

While determining whether the acquisition has occurred in the ordinary course of business should be a relatively simple exercise for many transactions, given the serious consequences for not notifying a transaction that should otherwise have been notified, a degree of caution will need to be exercised to ensure the acquisition truly is one that occurs in the ordinary course of business.

In the Explanatory Statement to the Amendment Determination, the Government has indicated a view that the ordinary course of business exemption would not extend to land-banking, acquiring land on which a competitor is operating its business, and the

transfer of production or supply capacity from one competitor to another (e.g. a manufacturing business acquiring the lease of one of its direct competitors’ manufacturing facilities).

On the flipside, examples of land interests acquired in the ordinary course of business include acquiring an interest in land to establish an office (notwithstanding its infrequency if the timing is common for the industry), headquarters or other routine trading activities, acquiring office towers for the purposes of commercial property investment, a property development company acquiring land to develop residential or commercial property. retailers leasing or acquiring land for a warehouse to store inventory, a manufacturer leasing or acquiring land for a new manufacturing facility, an energy generator acquiring land for a solar farm, or an energy distributor acquiring land on which to build pylons.

• Progressive acquisitions

The existing exemption pertaining to acquisitions of a subsequent interest in land by the same acquirer of an initial equitable interest, where the initial acquisition had been notified, has been expanded.

In addition to now also applying to ‘quasi‑land rights’, being mining rights, water entitlements and certain forestry rights, the exemption will now also cover acquisitions where the initial acquisition was the subject of a notification waiver.

An acquisition of an interest in land will also be exempt where the acquisition of the equitable interest occurred before 1 January 2026 and later stages occur after that date, subject to existing conditions that the same parcel/entitlements is materially the same and the ownership proportions are the same. This ‘grandfathering’ exemption will also apply to major supermarkets whose acquisition would otherwise be captured by the class determination.

• SPV structures

At present, an exemption exists that covers an acquisition of a legal or equitable interest in land (or an interest in an entity whose only non-cash asset is the interest in land) for the purpose of developing residential premises or for the purpose carrying on a business primarily engaged in buying, selling, leasing or developing land (other than a purpose relating to operating a commercial business on the land).

This exemption now also includes acquiring an interest in an entity that, aside from only holding a legal or equitable interest in land, also holds an interest in a special purpose vehicle if that vehicle is established and maintained for the purpose of financing a project relating to the land owned by the entity.

Asset deals now have bespoke thresholds

In response to perceived difficulties when applying the general financial thresholds for notification to an acquisition of assets that were not all, or substantially all, of a business (e.g. leasehold interests, plant and IP packages), the Amendment Determination has restructured the thresholds so that, from 1 April 2026, there will be a new path for acquisitions of assets that are not all or substantially all of a business. Acquisitions of such assets will instead be caught when either of the following filters applies:

• The Australian revenue of the acquirer and its connected entities is at least $200 million and the global transaction value (being either the market value of, or the consideration for, the deal) is at least $200 million.
• The Australian revenue of the acquirer and its connected entities is at least $500 million and the global transaction value (being either the market value of, or the consideration for, the deal) is at least $50 million.

The existing notification thresholds will in turn only apply to acquisitions of shares and units and, in the case of assets, those assets that comprise all or substantially all of a business. Calculating a target’s revenue, in the context of a business acquisition, will be by reference to Australian revenue attributable to that business.

Serial (‘creeping’) acquisitions: Two new carve outs

For the accumulated acquired shares/assets revenue tests applicable to ‘creeping’ acquisitions, where the acquirer’s previous three years of transactions must be considered to determine if the monetary thresholds are met, prior acquisitions will now also be disregarded in two circumstances:

• The previous share acquisition no longer gives the acquirer (or connected entities) control at the test time.
• A previous non‑share asset acquisition is no longer held at the test time.

This focuses the creeping threshold on holdings that can still shift competitive dynamics and reduces historical record‑keeping burdens for divested assets.

Financial market activity: Clearer exclusions with a ‘control’ safeguard

The Amendment Determination rationalises exemptions for financial instruments and market infrastructure:

• Close‑out / set‑off / combination of accounts: Routine contractual exercises are exempt without needing to assess ‘control’ or ‘substantially all assets’.
• Derivatives: These will now only be notifiable where the acquirer will begin, or can begin, to control an entity.
• Foreign‑exchange contracts: These are explicitly exempt.
• Debt instruments, security interests and securitisations: Exemptions will have broad lifecycle coverage but such transactions (except for securitisations) will be subject to the control‑based limiter. The taking or acquiring of a security interest will be exempt, and acquisitions arising from enforcement will be exempt when conducted in the ordinary course of a business of providing financial accommodation and all parties are dealing at arm’s length.

External administration and superannuation processes: Clarity and breadth

A table in the Determination provides a clear reference point as to when exemptions will apply to acquisitions made in the ordinary course of statutory/judicial/official management (e.g. APRA/ASIC/RBA‑linked capacities, insolvency controllers, receivers, mortgagees in possession). This is intended to minimise friction for parties while attending to transactions in the course of such functions.

Two superannuation exemptions recognise routine, competitively benign movements: member‑benefit transfers and change of trustee events.

Notification waivers

As had recently been foreshadowed, for those making a waiver application, a prescribed form must be used, which will require specific market and threshold content.

Waiver applications will also be subject to a 25 business days backstop. That is, if the ACCC does not decide to grant a waiver by that time, it must not grant the waiver.

The ACCC has made it clear in its guidance material that waiver applications are not to serve as a preliminary version of a phase 1 notification. Rather, it is expecting that waiver applications will be for acquisitions that can be assessed on the initial information supplied without the need to require further information or engage with third parties. In essence, the ACCC will need to be satisfied easily that the acquisition will have an immaterial market impact.

There will be special handling for surprise hostile takeovers and voluntary transfers under the FSTR Act, delaying publication on the acquisitions register until key bid/transfer milestones are attained, while maintaining transparency shortly thereafter.

Australian Competition Tribunal fees

The Determination has now also set fees payable for applications to the Australian Competition Tribunal to review decisions.

Fees for a review of an acquisition determination will attract a fee of 0.12% of the transaction value, capped at $2.95m, but no fee will be payable except where the transaction value is less than $50m, the applicant is a small business entity, the applicant is a small or medium charities, or the applicant is a consumer association or consumer interest group. There will also be discretion for fee relief in hardship circumstances. Where the Tribunal determines that the ACCC’s decision or determination should be set aside, 25% of the fee will be refunded to the applicant.

Threshold amounts, transaction value tiers and the cap will be indexed annually.

Concluding comments

While some of the rough edges to the new mandatory merger notification regime have now been smoothed – particularly with respect to land dealings – the regime will have an impact for many more deals, if not directly then at least at the preliminary stage to assess whether the transaction, or a stage of a transaction, is required to be notified, is exempt or would otherwise benefit from an application for waiver.

In all respects, planning early will be key, with a realistic timetable mapped for preliminary assessment of whether the transaction will need to be notified and, if so, preparing for engagement with the ACCC and the subsequent process.

For those looking at share and unit transactions beyond 1 April, very careful analysis will need to be undertaken to determine if the transaction, if it meets the general financial thresholds, will fall within one of the new four classes of notification relating to changes in voting power.

Further, for parties contemplating transactions that are not subject to mandatory notification, they should remain mindful that the general prohibition on acquisitions that have the effect, or likely effect, of substantially lessening competition will also continue to apply. Accordingly, they should also remain aware that transactions that materially impact the competitive landscape may nevertheless benefit from a notification application to the ACCC.

If you have questions about how the merger notification regime will affect your future transactions, please contact Gadens’ competition law experts.

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Authored by: 

Adam Walker, Partner
John Kettle, Partner