The main piece of legislation governing M&A transactions in Australia is the CCA; the oversight functions are vested in the ACCC. Obtaining approval for an M&A transaction in Australia requires providing the following information:
- information about participants;
- information about a proposed agreement (including assets & stocks) & M&A structure;
- copies of transaction-related documentation;
- description of products/services, markets & industries affected by a transaction;
- information on the impact on competition;
- information on public benefits & hazards of a transaction;
- contact details of competitors, key customers, suppliers & trade associations of which participants are members;
- any other information participants reckon pertinent.
Creating a JV in Australia requires compliance with CCA merger provisions, especially if its formation entails the purchase of stocks/assets. Participants are also recommended to take into account anti-competitive agreements & anticartel legislation.
M&A in Australia: Defining “Control”
Those planning to conclude an M&A deal in Australia should keep in mind that the CCA applies to all acquisitions of stocks or assets, irrespective of whether they result in acquiring control of a target entity or significantly reducing competition.
Purchasing a minority stake of an Australian company may also be deemed as an act of establishing effective control. Even if control isn’t achieved, the ACCC may consider a transaction as such, especially if it leads to a significant decrease in competition due to reduction of competitiveness between parties or increases the likelihood of potential coordinated actions.
The CCA applies to transactions that have the potential of significantly reducing competition in a market. They include:
- purchasing an Australian company (or a company elsewhere in the world);
- purchasing stocks or assets of an Australian company;
- acquiring companies outside Australia by legal entities registered or doing business in Australia.
Approval for an M&A transaction in Australia can be obtained in 2 ways:
- by contacting the ACCC on an informal basis; there’s no legal basis or timeframe for such permission, nor does it prevent 3rd parties from contesting a transaction;
- by getting the ACCC’s official permission; for this, participants must prove that a deal won’t result in a reduction in competition & that advantages for the public far outweigh possible disadvantages.
International M&A deals in Australia are also regulated by the CCA. It’s applicable to transactions taking place outside Australia, if they involve legal entities registered or doing business in Australia or Australian citizens residing in Australia.
FDI in Australia
Purchasing Australian enterprises by foreigners is governed by a non-resident investment approval regime According to it, certain transactions must be reported to the FIRB. Whether a transaction must be reported depends on several factors, namely:
- a transaction’s value;
- purchasers’ status;
- assets to be bought.
Depending on a transaction’s value & a type of stocks bought, an FIRB fee may be different. If a transaction causes no major damage to Australia's national interests, permission may be granted within 150 days of submitting an application.
Considering concluding an M&A deal in the Commonwealth of Australia? Need advice on M&A regulation in the Commonwealth of Australia? Please consider contacting IQ Decision UK.