TREASURY LAWS AMENDMENT (MERGERS AND ACQUISITIONS REFORM) BILL 2024
SECOND READING SPEECH
I move that this Bill be now read a second time.
Today I am proud to introduce the Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024.
I’m also introducing it on behalf of my colleague Andrew Leigh as the Assistant Minister for Competition, Charities and Treasury, and I’d like to acknowledge him and thank him for his contribution.
This Bill is another big step towards reforming Australia’s merger rules and further boosting competition and productivity in our economy.
It outlines the biggest reforms to Australia’s merger settings in almost 50 years.
It will create a regime that more efficiently and effectively targets mergers that are anti‑competitive, while allowing mergers that are pro‑competitive to proceed faster.
Speaker,
We understand most mergers have genuine economic benefits and are an important feature of any healthy, open financial system.
They can attract capital, re‑tool businesses and improve the uptake of new technologies.
They can allow businesses to achieve greater economies of scale and scope, to access new resources, technology and expertise.
This can flow through to consumers via greater product choice and quality as well as lower prices.
But some mergers can cause serious economic harm.
This can happen when businesses are not interested in improving profitability by lifting productivity.
When they’re solely focused on squeezing out competitors to capture a larger percentage of the market.
This can strangle innovation, reduce productivity in our economy and punish consumers with reduced choice.
Treasury’s Competition Taskforce has spent a lot of its time hearing about and thinking about these issues.
Andrew and I set up this Taskforce and its work has made plain that Australia’s approach to mergers is no longer fit for purpose.
Speaker,
The need for reform is clear.
Australia is one of only 3 OECD countries that doesn’t require compulsory notification of mergers.
Last year, over 1,400 mergers were recorded, at a value of around $300 billion.
Meanwhile, the ACCC looked at an average of 330 mergers a year over the past decade.
But we don’t know whether these are the right 330, or the mergers with the greatest potential to cause harm.
When the ACCC does assess mergers, the current approach is not transparent for businesses or the community.
Clearance can be too slow and cause expensive delays for some businesses as they wait.
This legislation will bring our merger system into the 21st century.
Speaker,
This Bill enshrines our historic reforms into law.
The legislation will improve our regime in five ways, by making the system faster, stronger, simpler, more targeted and more transparent.
Approvals will be faster under the new system, with mergers ticked within 30 working days where the ACCC is satisfied they pose no threat to competition.
The regime will be stronger thanks to a mandatory notification system and empowering the ACCC as the decision maker on all mergers.
The system will be simpler, because we are reducing three streams to a streamlined path to approval that removes duplication and standardises notification requirements for mergers.
It will be more targeted, because mergers that create, strengthen or entrench substantial market power will be identified and stopped while those consistent with our national economic interest will be fast tracked.
Finally, the merger regime will be more transparent, by ensuring the ACCC has better visibility of merger activity.
We are creating a public register of all mergers and acquisitions notified to the ACCC to promote this transparency and accountability.
Reviews of ACCC decisions will be the responsibility of the Competition Tribunal made up of a Federal Court judge, an economist and a business leader.
Under the strengthened system, not every merger will be captured.
Only mergers above monetary thresholds will need to be notified to the ACCC and be approved before proceeding.
The Government intends to set these monetary thresholds in regulations following the passage of this Bill.
There will be three key thresholds.
Firstly, any merger will be looked at if the Australian turnover of the combined businesses is above $200 million, and either the business or assets being acquired has Australian turnover above $50 million or global transaction value above $250 million.
Secondly, the ACCC will look at any merger involving a very large business with Australian turnover more than $500 million buying a smaller business or assets with Australian turnover above $10 million.
Finally, to target serial acquisitions, all mergers by businesses with combined Australian turnover of more than $200 million where the cumulative Australian turnover from acquisitions in the same or similar goods or services over a 3-year period is at least $50 million will be captured, or $10 million if a very large business is involved.
Land acquisitions involving residential property development and certain commercial property acquisitions won’t be included to avoid clogging up the system with simple land purchases unless they are captured by additional targeted notification requirements.
These thresholds have been developed in close consultation with industry and the community.
The thresholds strike the right balance between creating a rigorous and robust regime without calling in every merger.
These thresholds will allow the ACCC to focus its efforts on the mergers that really matter.
We want to see the majority of mergers approved quickly, so the ACCC can focus on the minority that give rise to competition concerns.
The thresholds will be reviewed 12 months after coming into effect, to ensure they are working as intended.
In addition, the legislation provides flexibility to allow the Treasurer to adjust and calibrate the thresholds to respond to evidence-based concerns from the ACCC about high-risk mergers, like in the supermarket sector.
This power, combined with the thresholds, will allow the ACCC to review all the mergers that they have been typically concerned about.
Using this provision, the Government intends to make sure the ACCC is notified of every merger in the supermarket sector.
Our intention to mandate this approach is based on evidence provided by the competition regulator.
Reviewing every supermarket merger is all part of the decisive action our Government is taking to help Australians get fairer prices at the checkout.
We want to make sure supermarket mergers don’t come at the cost of Australians, families and pensioners getting a fair price on their grocery bills.
Our merger reforms will help ensure our supermarkets are as competitive as they can be so Australians get the best prices possible.
On the advice of the ACCC Chair, the Government also intends to use this power to get the competition regulator to review purchases of an interest above 20 per cent in an unlisted or private company, if one of the companies involved in the deal has turnover more than $200 million.
This is all about lifting the level of scrutiny and transparency for private markets transactions, which have boomed in Australia in the past decade.
It will give the ACCC the ability to analyse changes of control in private companies to ensure negative competition effects are avoided and to scrutinise these deals in more detail.
The Government will also consider designation requirements for sectors such as fuel, liquor and oncology‑radiology.
These merger laws will take effect from 1 January 2026 and apply voluntarily from 1 July 2025.
Speaker,
This Bill has been developed through detailed consultation and we’d like to take a moment here to thank everyone for their contributions.
We’re especially grateful for the input from the Expert Advisory Panel, comprising Kerry Schott, David Gonski, John Asker, Sharon Henrick, John Fingleton, Danielle Wood and Rod Sims.
I’m also thankful for all the discussions and consultation we have held with businesses, the competition regulator, and the broader community.
That input and those views helped shaped this legislation.
This Bill builds on the Albanese Labor Government’s substantial and broad competition reform agenda, which is all about creating a more dynamic, more productive and resilient economy.
This includes revitalising National Competition Policy with all state and territory governments.
Abolishing around 500 nuisance tariffs to cut compliance costs, reduce red tape, make it easier to do business, and boost productivity.
Helping Australians get a fair price at the checkout with a new mandatory Food and Grocery Code, an ACCC inquiry and more funding for its investigations, reforming planning and zoning regulations and funding for CHOICE for price transparency reports.
Promoting competition in our financial system, including in payments, financial market infrastructure and through the introduction of a financial services regulatory grid.
Helping bank customers find and follow better deals on their mortgages and higher interest rates on their savings accounts.
This agenda will help expand choices, lift living standards and grow our economy.
It will help ensure that our people, businesses and industries are beneficiaries of the opportunities before us in the defining decade ahead.
The legislation I introduce today forms a key part of these competition reforms.
And we are proud to introduce it to the House.
Full details of the measure are contained in the Explanatory Memorandum.
