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The Competition and Consumer Act 2010 (CCA) has again
been amended with Federal Parliament passing changes which will
affect the assessment of mergers and acquisitions under section 50.
As reported by Norton Rose Australia in July 20111, the
Competition and Consumer Legislation Amendment Bill 2011
seeks to address a perceived gap in Australia's current law
relating to creeping acquisitions. The amendments passed now
subject mergers or acquisitions to an assessment of whether it is
likely to result in a substantial lessening of competition in
"any" market, with no requirement that the relevant
market be a "substantial" market.
The Explanatory Memorandum notes that the amendments will
"demonstrate more explicitly the importance of ensuring that
the Australian Competition and Consumer Commission (ACCC) and the
courts are able to consider the totality of the competitive effects
resulting from an acquisition". Further, the amendments will
also "remove doubts regarding the ACCC's or a court
ability to examine markets, including local markets, which may be
relatively small in geographic sense". As raised in our July
2011 legal update, these amendments have the potential to expand
the scope of section 50 and extend the reach of the CCA to mergers
and acquisitions made by relatively small businesses that operate
in local markets.
The CCA does not mandate the notification of a merger or
acquisition to the ACCC. Rather, the CCA exposes parties to Federal
Court orders such as injunctions and penalties for transactions
which will, or are likely to, have the effect of substantially
lessening competition. In practice, this places the onus on the
merger parties to notify the ACCC of relevant transactions and,
where appropriate, seek informal clearance.
The ACCC's merger guidelines recommend notification of a
transaction where:
The products of the merger parties are either substitutes or
complements; and
The merged firm will have a post-merger market share of greater
than 20% in the relevant market/s.
We will follow with interest whether these amendments result in
an increase in the number of ACCC instigated assessments of merger
activity by reference to a local market.
The amendments will come into effect no later than two months
after the Bill receives Royal Assent.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Readers will remember that last year we reported on the decision in Australian Competition and Consumer Commission v Nuera Health Pty Ltd (In Liquidation) [2007] FCA 695, where the Federal Court found the defendants to have engaged in reprehensible conduct in falsely promoting a treatment to cancer patients.
