Key Points:
The ACCC's updated Informal Merger Review Process Guidelines set more realistic timetables, but the new extensions might not benefit parties to a merger.
The ACCC's informal review procedure is the most widely used process to obtain merger clearance in Australia. The updated Informal Merger Review Process Guidelines released in late September are therefore an important source of procedural information for merging parties and advisers, building on experience with the evolving informal review process over the last seven years.
The relatively new pre-assessment process developed for dealing quickly with the large number of non-contentious mergers notified has allowed resources to be diverted to review more complex transactions. However, this does not appear to have resulted in materially quicker public reviews overall.
The process by which merger parties are provided with feedback on issues and concerns raised during public merger reviews is set out in detail in the Guidelines, but with important caveats about the bespoke nature of each informal merger review process.
We welcome the clarified approach to releasing Public Competition Assessments (PCAs), which are published summaries of the ACCC's reasoning in complex or contentious merger matters. This might be expected to increase legal certainty for practitioners and market participants working in concentrated sectors.
Timing of the ACCC's review
The implications of an ACCC informal merger review for deal planning can be significant.
Therefore, we welcome the relatively new pre-assessment process which the Guidelines describe. This process allows uncomplicated transactions to be dealt with very quickly (within two weeks) and permits ACCC resources to be diverted to reviews of more complex transactions.
That said, this development does not appear to have resulted in substantially quicker public reviews overall. The Guidelines revise the timing estimates in relation to mergers which require public reviews. The ACCC had indicated in the past that it endeavours to complete public informal merger reviews within eight weeks. While the Guidelines echo this, they suggest that the typical duration for a public informal merger review could stretch to 12 weeks or longer.
The typical steps in a process include:
- a pre-assessment process, which would take around two weeks;
- a public review of between 6-12 weeks, after the pre-assessment stage concludes;
- if the ACCC identifies competition issues with the merger in its public review, a statement of issues (SOI); and
- an extended review period after the SOI is published, which might last for another 6-12 weeks (or longer depending on the transaction's complexity).
While we welcome more robust reviews of transactions generally, extensions in timetable are not advantageous for merger parties. Reductions in certainty in timetabling, and additional roadblocks to completion of transactions (especially in the context of a global economic downtown), are not to be encouraged. It is notable that the updated timetables in the Guidelines compare relatively unfavourably with the timetables for review at certain other international regulators.
Publication of ACCC concerns and timing changes on the ACCC website
After considerable negative comment from stakeholders, the ACCC has rejected a proposal to publish information on the ACCC website about issues letters sent to the parties which set out competition concerns. Instead, the Guidelines include helpful tables setting out the shape of a market inquiries process generally (both before and after a possible SOI).
The pre-SOI market inquiries process is envisaged to include a market testing phase of approximately 2-5 weeks from the commencement of the informal public review, followed by a period of around 2-4 weeks for the ACCC to digest market comments and consult with the parties.
The Guidelines also clarify the practice of publishing clear, indicative transaction timetables from the outset of a merger review, in response to public comment on the usefulness of these deadlines for planning purposes. In common with the 2006 Guidelines, the fact that the published decision date is purely indicative is clearly stated in the Guidelines.
ACCC reasons for decisions – Public Competition Assessments
The competition community had noted a considerable reduction in the number of PCAs issued by the ACCC in 2012, and significant delays in the PCAs that were published. Timely and detailed PCAs can be expected to allow advisers and corporations (particularly those working in concentrated sectors), to assess the risks of potential transactions more quickly and easily.
The Guidelines state that the ACCC will endeavour to issue PCAs within 30 days of taking a decision in a complex merger (subject to confidentiality issues). While this period is longer than the two-week publication period set out in the 2006 Guidelines, this more realistic deadline should allow the ACCC to achieve its objectives.
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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.