22 October 2025
7 min read
Published by:
From 1 January 2026, Australia will move from a voluntary to a mandatory merger notification regime. Transactions that meet specified financial thresholds and have a sufficient Australian connection will need to obtain clearance from the Australian Competition and Consumer Commission (ACCC) before the transaction is put into effect.
The reform, introduced under the Treasury Laws Amendment (Mergers and Acquisitions Reform) Act 2024, aims to strengthen merger scrutiny and captures a broad range of acquisitions that result in control over a target’s strategic or commercial decisions. Acquisitions include shares, assets, units, partnership interests, intellectual property, and project interests. The regime also extends to agreements to lease, joint venture interests, and acquisitions of interests in real property.
The ACCC may prohibit transactions that are likely to substantially lessen competition in any Australian market. In assessing this, the regulator will consider whether an acquisition would create, strengthen, or entrench a substantial degree of market power. For renewable energy investors and developers, this means greater scrutiny of transactions that consolidate ownership of assets, electricity generation or retail supply.
The new regime captures acquisitions of shares, units, assets, and interests in managed investment schemes (including options, legal or equitable rights such as intellectual property rights, contractual rights, goodwill, or partnership interests), provided that the acquisition results in control and meets any of the threshold tests below.
Threshold test 1 – economy-wide monetary threshold
A transaction must be notified to the ACCC if:
‘Australian revenue’ refers to the portion of an entity’s gross revenue (determined according to accounting standards for its most recent 12-month financial reporting period) that is attributable to transactions or assets within, or into, Australia. The ‘Target’ is the company, person, or asset that is being acquired. This could be a company whose shares are bought, a business or individual whose assets are purchased, or any other entity determined by the Minister under section 51ABI(3) of the Treasury Laws Amendment Act.
If a Target Asset’s Australian revenue cannot be reasonably determined, 20% of its market value applies. For lease acquisitions, this generally means 20% of total rent over the lease term. As the legislation does not currently clearly define rent attribution, parties should exercise caution.
Threshold test 2 – large group threshold
Transacting parties must notify a transaction to the ACCC if:
Serial acquisitions
The thresholds tests also apply to serial acquisitions of the same or similar goods or services completed within a three-year period that, collectively, satisfy threshold test 1 or threshold test 2.
Parties should monitor serial acquisitions, as multiple acquisitions over three years for similar goods or services are aggregated under these tests. This can push combined values over the $50 million (tier-1) or $10 million (tier-2) thresholds, triggering mandatory notification even if each acquisition alone falls below the limits.
It is also important to consider ‘connected entities’ in the assessment, which includes related entities and controlled entities (where the entity has legal ownership or control over that entity, and includes ownership or control with one or more associates as defined under the Corporations Act 2001(Cth)).
Australia’s renewable energy transition has already encountered financial challenges, underscoring the sector’s reliance on well-capitalised investors to fund new projects and, in some cases, acquire distressed assets at discounted valuations.
The ACCC’s strengthened merger regime may add further complexity, potentially slowing or deterring such transactions. Uncertainty around whether acquisitions of controlling interest, or interests in connected entities, will trigger notification obligations could make investors more cautious, affecting the pace at which projects are developed and financed, and the broader transition to clean energy.
The renewable energy market is typically considered by the ACCC as a distinguished sector, for example electricity generation or retail supply. When assessing whether an acquisition substantially lessens competition, the regulator will likely consider impacts on consumer choice, prices, quality or service, barriers to entry, and potential collusion between competitors. Geographic factors (such as regional energy grids), technology-specific barriers, and the role of government incentives for renewable generation may also be considered.
How to manage foreign transactions requiring FIRB approval
When an acquisition falls under the ACCC’s new merger review regime and requires Foreign Investment Review Board (FIRB) approval, parties need to carefully plan the sequencing and timing of both notifications. The decision on which process to start first will often depend on the potential competition issues and any national interest considerations arising from the proposed acquisition. Importantly, FIRB and ACCC can share information under their respective legislative frameworks to ensure that foreign acquisitions do not threaten competition or national energy security.
There are some exemptions for acquisitions, such as acquisitions of residential land development, land trading by non-operating businesses, commercial lease renewals, with some caveats.
Following a recent announcement of the Assistant Minister Dr Andrew Leigh on 15 October 2025, changes are in motion to aim to ease compliance by excluding routine leases and land interests from notification requirements, unless specifically flagged. They also include a more straightforward approach to monetary thresholds for asset and lease acquisitions, reduced reporting burdens for repeat transactions, and broader exemptions for financial market operations. These adjustments will be introduced through changes to subordinate legislation and are to be kept front of mind when considering application of the changes.
Public benefit exemption
In the renewable energy sector, the ACCC may raise concerns about reduced competition in areas such as electricity generation, retail supply, or grid services. If an acquisition is blocked at phase 1 or phase 2, parties can apply for clearance on the basis that the transaction offers substantial public benefits that outweigh any public detriments, addressing the anti-competitive concerns.
Examples of public benefits include:
The ACCC may impose conditions or suggest divestments while still accepting the public benefit, as seen in Brookfield’s acquisition of Neon.
Any transaction completed without following the mandatory notification and approval process will be automatically void, meaning the acquisition has no legal effect and any steps taken to integrate the businesses may need to be unwound.
Corporations can be fined the greater of $50 million, three times the value of any benefit gained, or up to 30% of turnover during the breach period, while individuals can be fined up to $2.5 million. Providing false or misleading information during the merger notification process can result in fines of up to $1 million for companies and $200,000 for individuals.
Importantly, liability is not limited to the acquirer. Any party involved in, or knowingly concerned with, a contravention (for example, joint venture partners or investors) may also be exposed.
Notified mergers will generally be published on the ACCC’s public register, though confidentiality protections apply for sensitive or hostile transactions, and confidential pre-notification discussions remain available.
Before the new merger regime commences on 1 January 2026, parties should evaluate their transactions and consider adjusting their approach. This may include restructuring deals, seeking early legal advice, allowing more time for regulatory clearance, adding conditions to transaction documents, and planning for termination or risk allocation if clearance is denied.
If you have any questions about the new merger regime or require assistance with your transactions, please contact us here.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
Published by:
