Christmas has arrived early for competition law aficionados as the Commonwealth Government rushes to fulfil its pre-election agenda. And while festive celebrations in Australia usually differ from those in Europe (summer BBQs by the beach aren’t exactly chestnuts roasting on an open fire), the Australian competition laws are increasingly aligning with Europe and the United Kingdom. 

In this article, we take a look at two of the Government’s Christmas crackers: new mandatory merger clearance laws and an ex ante digital platform competition regime. 

In light of these reforms (the former having passed Parliament, the latter a policy proposal at this stage), we consider who may feel that they are on the naughty list this year, as well as those who may happily find themselves on the nice list. 

Merger reform

Following extensive consultation, Parliament has now passed the Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024 (“Merger Bill”).  The Merger Bill overhauls the existing merger control provisions of Australia’s Competition & Consumer Act 2010 (Cth) (“CCA”).  At present, merger control is a voluntary and informal process. Mergers are only prohibited where they would have the effect or likely effect of substantially lessening competition.  Merger parties could seek informal clearance or a formal merger authorisation, with the latter in particular being rare. 

The Merger Bill introduces a mandatory and suspensory regime, under which acquisitions that meet certain thresholds will need approval. While the thresholds have not yet been confirmed, the Government has separately consulted on possible thresholds which include:

1. Mergers where the Australian turnover of the combined businesses is above $200 million, and either the business/assets being acquired has an Australian turnover above $50 million or globally above $250 million;
2. Mergers involving a very large business with Australian turnover over $500 million buying a small business with assets/value over $10 million; and
3. Mergers by businesses with combined Australian turnover of more than $200 million where cumulative Australian turnover from acquisitions in same/similar gods/services over a three-year period is at least %50 million, or $10 million if a very large business is involved.

Compulsory notifications will come into effect on 1 January 2026, but voluntary notifications can be made starting from 1 July 2025. The government has proposed a $50,000–100,000AUD fee for lodging a notification,[1] though small businesses are likely exempted.[2]

Phases

Notifications under the new merger control regime undergo up to two phases, with an optional public benefits application phase if the Australian Competition and Consumer Commission (“ACCC”) determines that the acquisition should not proceed. Each phase has a statutory timeframe, placing the burden of deadlines onto the ACCC. If the ACCC fails to decide within the prescribed determination period, then the notification is considered approved. The ACCC must provide written reasons for its determination.

The ACCC can gather information by giving interested persons an invitation to make written submissions or consult with persons who may assist in making its determination. However, only information given more than 15 business days before that phase’s end can be considered.

I          Phase 1 – Preliminary Review

Phase 1 is designed to efficiently process acquisitions with no competition concerns/issues. Upon confirmation that the ACCC has received an acquiring party’s notification, phase 1 begins, and lasts for 30 business days (though this can be extended). The ACCC will consider whether the acquisition will cause competition concerns that will require further investigation. If it does, it will progress the notification to a Phase 2 review. It will issue a written notice outlining the nature of the theory of harm the ACCC believes the acquisition will have, and the matters it will investigate before a determination is made.

If no competition concerns surface, the ACCC may decide to approve the acquisition as quickly as 15 business days after the notification was received.

II         Phase 2 – Investigating Competition Concerns

Phase 2 lasts for up to 90 business days and is designed to allow the ACCC to conduct a substantive investigation on whether the acquisition would substantially lessen competition. The ACCC may decide to approve the acquisition at any time during this phase, though disapproving determinations must follow a prescribed statutory timeline. 

If a determination has not been made, on the 25^th business day, the ACCC must issue a notice of competition concerns, which includes:

• A preliminary assessment on whether the acquisition, if put into effect, substantially lessens competition in any market.
• The grounds, evidence and/or other materials the preliminary assessment is based on.

Parties will then have a reasonable opportunity (25 business days) to provide written or oral submissions to the ACCC to address these concerns. 

III       Public Benefits Application – Asking for an Exception

This optional phase is designed to allow parties to argue that the public benefits of the acquisition substantially outweigh the public detriments involved. This phase lasts for 50 business days. Any application must be made within 21 days of the determination and may be subject to an additional fee.[3]

Parties can make a public benefits application if a determination has been made which:

• approves the acquisition subject to conditions; or
• disapproves the acquisition.

On the 20^th business day, the ACCC must provide a public benefits assessment to the applicant containing:

• its preliminary assessment of the benefits and detriments to the public that would or likely would result from the acquisition, 
• an assessment of the significance of those benefits/detriments, and
• the evidence, grounds and other materials supporting its assessment.

Like Phase 2, the ACCC must allow reasonable opportunity (15 business days) for the applicant to respond by oral or written submissions. 

After considering the information, the ACCC may approve, approve subject to conditions, or reject the application. If it fails to decide, it is taken to have rejected the application.

Appeals

Like with any other administrative decision-making in Australia, ACCC notification determinations can be appealed in three ways:

1. Internal Review
2. Judicial Review
3. Merits Review

Given the new merger regime largely shifts away from a judicial enforcement model and that judicial review will be limited to reviews of Tribunal decisions, we limit our focus in this article to the merger reviews that may be undertaken by the Competition Tribunal.

I          Merits Review – The Competition Tribunal

Parties can apply for a review by the Australian Competition Tribunal (“Tribunal”), which will incur additional fees. Parties to the acquisition or other interested persons (if the Tribunal permits) may make an application within 14 days of the reviewable decision. The Tribunal must decide within 90 business days of the decision unless it provides written notice to parties extending the determination period. The earliest time the Tribunal may decide is 45 business days after the review begins.

In undertaking a merits review, the Tribunal effectively relies on evidence that was available to the original decision maker.  However, the Tribunal will also have powers to consult with technical experts and consumer associations or interest groups.  In addition, it may permit a person to provide new information, documents or evidence if it is a materially relevant to the ACCC’s decision and did not exist at the time of the decision,

The Tribunal cannot review a determination while a public benefits application is being considered by the ACCC. If a public benefits application is made during the review process, the Tribunal must cease its review until the public benefits application has been finally determined by the ACCC.  

It’s likely that this will place increased pressure on the Competition Tribunal, at least to begin with.

A New Digital Platforms Regime

On 2 December 2024, the Government announced its plans to introduce a new digital competition regime with upfront rules for digital platforms with significant market power. The proposed regime is designed to promote competition by preventing anti-competitive conduct and reducing barriers to entry in digital platform markets. The consultation is open until 14 February 2025.

The consultation follows the ACCC’s fifth interim report in the Digital Platforms Services Inquiry,[4] where it recommended that service-specific codes of conduct for designated digital platforms be introduced to address perceived competition issues such as anticompetitive self-preferencing and tying. Like the recent reforms to Australia’s merger clearance laws, Treasury’s proposals largely align with the ACCC’s recommendations and will significantly expand ex-ante regulation in the digital services sector.  The ACCC is not without experience of similar models, in particular, the access regime for declared services under Part IIIA of the CCA and the telecommunications access regime in Part XIC.  Both of which are likely to inform the future treatment of designated digital services.

The Government is also positioning Australia as a “fast follower” of similar regulatory regimes around the world, which would allow Australia to learn from, and build on, reforms overseas such as those in the EU and UK. It is evident that a key focus for the Government is to promote coherence and consistency with international regimes. The proposed regime is also intended to complement other Government initiatives such as privacy reforms or the new Scams Prevention Framework. 

Rationale for the New Regime

In proposing a new digital competition regime, the Government is concerned with the market power of big tech platforms and their capacity to limit competition, with potential harms in the form of higher costs, barriers to switching, and lack of choice. The Government also seems to have accepted the ACCC’s proposition that its existing enforcement powers are insufficient to deal with the platforms' market power, in particular due to the fast-moving nature of digital platform markets and their unique characteristics. Whether this takes sufficient account of the potential for regulation to harm innovation remains to be seen.

Designation

The Government’s proposed regime would introduce new ex-ante obligations for certain ‘designated’ digital platforms that are significant to consumers and businesses and hold an important position in the economy. Like the ACCC, Treasury prefers for these obligations to be targeted at particular platform entities and services.

The regime would provide for the ACCC to conduct a ‘designation investigation’ to assess whether it is appropriate to designate any platforms that supply a particular service (e.g. app marketplaces). An outline of the proposed designation process is set out below:[5]

As part of a designation investigation, the ACCC would consider both quantitative factors (such as service-specific or firm-wide revenues or the number of users) and qualitative factors (such as the amount of market power held by the platform in the service or whether a company holds a valuable intermediary position). Although quantitative thresholds are set to act as the primary criteria such that, where an entity does not meet quantitative thresholds, it is unlikely to be designated save for exceptional circumstances. Following an investigation by the ACCC, the relevant Minister would make a designation decision having regard to information about the designation considerations (including advice from the ACCC). 

The Australian approach has similarities with international regimes, particularly the UK’s Digital Markets, Competition and Consumer Act 2024, where the designation of a company with ‘strategic market status’ involves consideration of both quantitative thresholds (i.e. turnover) and qualitative thresholds (i.e. whether a firm has market power or a position of strategic significance), but where a company cannot be designated unless the turnover thresholds are met.

Obligations for designated platforms

The proposed regime is a “hybrid model” that would include both broad obligations and service-specific obligations to target anti-competitive conduct. Broad obligations, which would be contained in primary legislation such as the CCA, will apply to all designated platforms in respect of their designated service and would target conduct that may occur across digital platforms services, such as: 

• Anti-competitive self-preferencing. 
• Anti-competitive tying.
• Impediments to consumer switching.
• Restrictions on interoperability.
• Unfair treatment of business users.
• Lack of transparency.[6]

The regime would also allow for service-specific obligations to be contained in subordinate legislation (such as regulations). These obligations would only apply to platforms designated in respect of the particular service. 

Treasury has indicated that, at least initially, it will focus on app marketplaces and ad tech services for service-specific obligations. It’s unsurprising that ad tech services are in the Government’s crosshairs, given that the ad tech supply chain has long been a concern of the ACCC which has railed against the perceived lack of transparency in this sector and the impact on traditional news media revenues. Likewise, litigation in a number of jurisdictions has focussed regulators on the potential competition concerns in app marketplaces.

In relation to app marketplaces, the types of service-specific obligations under the new regime may include eliminating payment system restrictions and preventing platforms preferencing their own apps. The types of service-specific obligations for ad tech services may include transparency requirements, obligations to address conflicts of interest, and preventing platforms from prioritising their own advertising services. 

As alluded to above, Treasury’s proposal shares many of the attributes of the access regimes in Australia’s competition law for monopoly infrastructure and telecoms. These include the provision for a platform to be designated or declared, the obligations against self-preferencing, and even potential record keeping requirements. If implemented, there could be significant learnings from the existing regimes which have proven cumbersome and prone to gaming.

The new regime would also establish a process where a designated digital platform could apply to the ACCC for an exemption from an obligation, for example where there are countervailing benefits of the conduct (although there would be a higher threshold than the existing net public benefit test for authorisations). In line with Treasury’s aim to achieve coherence with international regimes, it is proposed that the ACCC could consider any similar exemptions granted overseas if they are appropriate to the domestic framework. 

Compliance and Penalties

The ACCC will be responsible for supervising compliance, investigating contraventions, and imposing penalties under the proposed regime. It is proposed that the ACCC would be able to use its compulsory information gathering powers under section 155 of the CCA under the new regime. The regulator would also prepare guidance on the new regime, and continue to examine changes in digital platform markets. 

Treasury has indicated that the maximum penalties currently available under the CCA are appropriate for the proposed regime. This means that penalties for a breach of the new regime would be the greater of $50 million, three times the value of the benefit obtained, or 30% of adjusted turnover during the relevant breach period. It is also proposed that other remedies, such as injunctions, declarations and disqualifications orders, should be available.

The proposed regime would also provide mechanisms for digital platforms to submit a ‘compliance proposal’ where it outlines measures implemented in other international regimes and commits to adopting those measures in Australia, subject to the ACCC assessing and accepting the proposal. Again, this demonstrates the Government’s focus on ensuring consistency and coherence with regimes overseas, while also ensuring that the framework is suitable for the Australian context. 

So who will be thanking Santa this Christmas?

Assuming that the digital platform regime is adopted, the top of the nice list would appear to be the ACCC and its Chair, former law firm partner Gina Cass-Gottlieb. The ACCC and Ms Cass-Gottlieb have campaigned strongly for reforms to address the perceived harms of anticompetitive conduct in digital platform markets, and Treasury’s proposals largely align with the ACCC’s recommendations.

The ACCC has also pushed for some time for an overhaul of Australia’s merger regime. The Government’s reforms will create a mandatory and suspensory merger regime, but it will also provide the regulator a broader regulatory toolkit in reviewing mergers, for example to consider so-called ‘serial acquisitions’, or acquisitions that ‘create, strengthen, or entrench’ a substantial degree of market power. 

Competition and regulatory lawyers will also be thanking Santa, with businesses looking to navigate the complexities of both new merger laws, particularly firms that are considering acquisitions over the next few years, as well as the proposed new digital competition regime. In the long-run, consumers may also be thankful for competition reforms which ultimately seek to promote competition and the interests of consumers. In relation to the merger reforms specifically, consumers may be thankful for an increased level of transparency in respect of merger reviews. On the other hand, big tech companies may be feeling like they’ve been left on the naughty list, with some digital platforms likely to be subject to ex-ante regulation. This will be particularly impactful for digital platforms in the ad tech and app marketplace sectors, with the Government seeking views on whether social media services should also be prioritised under the regime. The new merger laws will also allow the ACCC to scrutinise ‘serial acquisitions’ which often occur in technology markets. 

This feeling is likely to be compounded by recent news that the Federal Government intends to introduce a ‘News Bargaining Incentive’ to encourage some large digital platforms to negotiate deals to pay for news services with Australian news media businesses. 

Lastly, those with a dislike for complicated numbering conventions may also feel left out in the cold by the new merger control reforms as they navigate between subsection 51ABA and 51ABZZU. 

For more information on merger reform, or if you are interested in making a submission to the Digital Competition Regime Consultation Paper, please contact Thomas Jones or Matthew Bovaird.

[1] https://treasury.gov.au/sites/default/files/2024-05/p2024-518262-merger-reforms-paper.pdf at page 2.

[2] https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fems%2Fr7257_ems_05bde550-228d-4eef-b145-6df1df99540a%22 at page 144.

[3] https://treasury.gov.au/sites/default/files/2024-05/p2024-518262-merger-reforms-paper.pdf at page 2.

[4]See our earlier article here.

[5] See the Treasury’s proposal paper at page 15.

[6] See the Treasury’s proposal paper at page 19.