Australia: ACCC Demonstrates Fresh Willingness to Accept Behavioural Remedies
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The acquisition of shares or assets in Australia that have the effect or likely effect of substantially lessening competition is prohibited under Sections 50 and 50A of the Competition and Consumer Act 2010 (Cth) (CCA). There is currently no mandatory notification or filing regime in Australia (although this is the subject of proposed reforms, detailed later in this chapter). Parties can seek a statement from the Australian Competition and Consumer Commission (ACCC) that it will not take steps to oppose a merger under the informal merger clearance regime. Alternatively, parties can seek merger authorisation from the ACCC under the CCA. The vast majority of mergers in Australia are assessed under the informal merger clearance process, which remains the most flexible, convenient and relatively effective process for obtaining merger approval. ACCC merger statistics indicate that in 2021–2022, the ACCC considered 463 mergers, of which 437 were pre-assessed by the ACCC in terms of its confidential informal merger clearance process and required no public review; only 26 mergers were subject to public review.
The ACCC has the power to accept court enforceable undertakings under Section 87B of the CCA (87B Undertaking) as a means of remedying competition concerns that may arise from mergers. Although there are no formal restrictions on the types of remedies the ACCC can accept under an 87B Undertaking, the ACCC has a stated preference and record of preferring structural remedies over behavioural remedies. For instance:
- of the seven transactions approved by the ACCC subject to undertakings in 2022-2023, only one was subject to behavioural undertakings;
- of the three transactions approved by the ACCC subject to undertakings in 2021-2022, only one was subject to behavioural undertakings; and
- both transactions approved by the ACCC in 2020-2021 involved structural undertakings.
This chapter provides practical guidance for navigating complex merger review in Australia. After a brief overview of the merger review framework, we discuss the types of remedies typically accepted by the ACCC. We then consider strategies for remedy negotiations, followed by a discussion of how remedies are modified or enforced. Finally, we consider how the ACCC interacts and cooperates with other regulators.
Overview of merger review process
The merger control regime in Australia is administered and enforced by the ACCC. Section 50 of the CCA prohibits the acquisition of shares or assets that would have the effect, or likely effect, of substantially lessening competition in a market in Australia. Unlike some other jurisdictions, there is no mandatory notification regime for mergers in Australia. However, a practice has developed of seeking informal merger clearance from the ACCC in appropriate cases. The ACCC’s Informal Merger Review Process Guidelines provide some indication as to when the ACCC may expect to be notified of a merger. These Guidelines state that the ACCC expects to be notified of mergers in advance where the products or services of the merger parties are either substitutes or complements, and the merged firm will have a market share of more than 20 per cent post-merger. The ACCC has also identified industries or sectors of specific focus where it would expect to be notified of a merger and more likely to seek to review – including acquisitions by large digital platform services, and in the financial services, health, energy and telecommunications sectors.
If parties do not notify a merger to the ACCC, the ACCC can, and does, investigate mergers that it becomes aware of through other channels such as complaints, the media or other regulators within Australia (e.g., the Foreign Investment Review Board (FIRB)) or in other jurisdictions. If the ACCC forms a view that a merger is likely to breach Section 50 of the CCA, the ACCC can apply to the Federal Court, which can impose a range of remedies, including an interim injunction preventing the transaction from completing, ordering divestiture, or applying for pecuniary penalties (for companies, the greater of: A$50 million; three times the value of the benefit reasonably attributable to the conduct (if this can be determined); or, if the value of the benefit cannot be determined, 30 per cent of the company’s adjusted turnover during the breach period, per contravention; and for individuals, up to A$2,500,000 per contravention). The ACCC has no independent powers to seek to prevent mergers without a court order.
An outline of the available avenues and the relevant process and timing for each is set out below. Noting that although the ACCC does have regard to commercial timing pressures, it has publicly stated that parties in contentious mergers should expect longer timelines for review.
Pre-assessment and confidential review
When the ACCC is notified of a potential transaction, the ACCC will determine whether it is capable of pre-assessing the transaction (review on the papers) or if a public review is required. The ACCC’s Informal Merger Clearance Guidelines state that the typical duration of a pre-assessment is two weeks; however, in practice, it is common for the pre-assessment process to take longer. The ACCC does not provide any public reporting on the timing of pre-assessments. Statistics maintained by Gilbert + Tobin suggest that the typical length of a pre-assessment is around five to six weeks and reviews can often take longer.
Parties can also seek a confidential review from the ACCC, although this is relatively rare.
Informal merger clearance
The informal merger review process allows the ACCC to analyse a merger and provide a statement of executive intention that it will either oppose or not oppose the merger should the parties proceed to complete. An informal clearance decision by the ACCC under the informal review process is not underpinned by legislation and is a statement of intention by the ACCC, and is expressly subject to the accuracy of the information provided to the ACCC by the parties.
A public review involves the ACCC undertaking market inquiries with interested parties, or seeking further information from the merger parties themselves. As a result of these inquiries, the ACCC may publish a ‘statement of issues’ (SOI), detailing its competition concerns and whether it considers the transaction is likely to substantially lessen competition. Following a SOI, the ACCC conducts a second phase of review, after which it makes a final decision.
As detailed below, merger remedies in the form of 87B Undertakings may be offered at any time during a merger review. Generally, the ACCC has in place a process for public consultation of any offered 87B Undertakings, which may add additional time to a review.
The average length of various types of informal review based on Gilbert + Tobin’s analysis of public information is shown in the table below.
|Type of review||Average calendar days (2014–2023)|
|Phase I (no SOI), no undertakings||78 (~2.5 months)|
|Phase I with undertakings||173 (~6 months)|
|Phase II (with SOI), no undertakings||172 (~6 months)|
|Phase II with undertakings||191 (~6.25 months)|
The merger authorisation process is the statutory and formal avenue for obtaining ACCC merger approval. The process in its current form was introduced in late 2017 following the Harper Reforms. Six merger authorisation applications have been considered by the ACCC under this process, four of which were granted (three subject to merger conditions in the form of 87B Undertakings). At the time of writing, there is one authorisation application under consideration.
A benefit of the formal merger authorisation process is that it provides merger parties with statutory protection against actions by the ACCC or third parties for a contravention of Section 50 while the authorisation is in force. The ACCC has the power to authorise a merger when it is not likely to substantially lessen competition, or if the public benefit from the merger would outweigh any detriments (including detriments from any lessening of competition). The public benefit limb of the authorisation test has only formed the basis of a merger authorisation decision by the ACCC in one previous application for authorisation. The three other authorisations were granted on the basis of the ACCC being satisfied that no substantial lessening of competition would arise.
Merger parties may offer undertakings as merger conditions to address concerns identified by the ACCC at any stage of the merger authorisation process. Whether a merger will be subject to conditions is dependent on the ACCC’s discretion to exercise its powers to impose conditions. The exercise of this discretion involves a determination based on the nature and circumstances of the proposed acquisition, including the likelihood of a substantial lessening of competition resulting from the transaction, and the likely benefits and detriments of the transaction.
Interaction of FIRB process and ACCC review
Some transactions involving foreign ownership require approval by the FIRB. Although the FIRB process is formally separate from the ACCC’s review process, one of the matters taken into account by the FIRB in assessing whether a notifiable transaction is contrary to the national interest is whether the transaction would have an adverse effect on competition in Australia. It is typical for the FIRB to seek input from the ACCC as part of assessing this aspect of the national criteria. As such, merger parties should be aware that if a transaction involves notification to FIRB, it is likely that it will also involve de facto notification to the ACCC.
ACCC merger reform proposals
The ACCC is currently proposing significant reforms to Australia’s merger control regime. The proposals include the introduction of a new mandatory and suspensory merger notification regime, under which parties to a proposed transaction that meet certain thresholds (that could be based on global or domestic turnover of parties or transaction consideration) will be required to notify the ACCC and be prevented from completing the transaction until they have received ACCC clearance. Under the proposal, the ACCC would also have the power to ‘call in’ a transaction falling below the threshold where the transaction raises competition concerns. Parties to non-contentious mergers that meet these thresholds would have the ability to apply for a notification waiver to allow the transaction to be assessed by way of a more streamlined process.
The ACCC has also suggested specific changes to the ‘merger factors’ in Section 50 of the CCA to include additional factors relevant to acquisitions by Big Tech companies, such as the loss of actual or potential competitive rivalry, whether the acquisition is part of a series of relevant acquisitions or enables a platform to entrench its market power or extend it into adjacent markets, and whether the acquisition increases a platform’s control of data, technology or other important assets.
Under the ACCC’s proposed changes, parties would need to comply with extensive mandatory upfront information requirements when notifying the ACCC. The ACCC has not yet specified the information that will be required under the proposed new regime or the proposed statutory time frames.
The proposed reforms are not yet finalised and will require legislative amendment to come into force. The ACCC has submitted its proposed reform paper to the Australian Treasury and awaits the Treasurer’s views.
ACCC approach to merger undertakings
If the ACCC has determined that a transaction is likely to result in a substantial lessening of competition, the merger parties may consider whether they are willing to address the ACCC’s concerns by offering a remedy in the form of a court enforceable undertaking. These undertakings are voluntary; the CCA does not give the ACCC the power to require merger parties to provide undertakings. Section 87B of the CCA enables the ACCC to accept enforceable undertakings as a remedy for potential breaches of the CCA, including breaches of Section 50 or 50A. Merger parties can propose an 87B Undertaking in both the informal clearance process and the formal merger authorisation process, and at any stage of these review processes. Outside the ACCC process, it is also possible for parties to offer commitments directly to the Federal Court during court proceedings; if such undertakings are accepted by the Court, the ACCC may also accept an 87B Undertaking to assist in the monitoring and enforcement of the undertakings accepted by the Court.
The merger remedies process under Section 87B of the CCA is flexible and allows parties to be proactive in considering when it would be appropriate to offer undertakings to the ACCC. For example, if timing is particularly critical and competition concerns are readily apparent, it may be appropriate to offer an undertaking at the same time as seeking informal clearance.
Like its counterparts, the ACCC’s Merger Guidelines allow merger parties to offer structural or behavioural undertakings (or both). However, the ACCC prefers structural undertakings (especially divestiture) over behavioural undertakings, as it considers that structural remedies tend to be more straightforward to administer, monitor and enforce. Since 2018, the ACCC has accepted 22 merger undertakings, 18 of which include divestiture, with only four involving behavioural remedies. In a joint statement with the UK’s Competition and Markets Authority (CMA) and Germany’s Federal Cartel Office, the ACCC reiterated its preference for structural remedies, stating as its reason for this that behavioural remedies create continuing economic dependencies that are unlikely to recreate pre-merger competition and may distort the natural development of the market. Behavioural remedies also raise circumvention risks and necessitate extensive post-merger monitoring. The ACCC also noted that increasing complexity of markets and the need for forward-looking assessments is likely to require competition authorities to continue to favour structural remedies.
The ACCC’s preference for structural undertakings and reluctance to accept behavioural undertakings is based on its view that the latter typically require parties to act in a way that is inconsistent with their commercial incentives, are susceptible to circumvention and are difficult to monitor and enforce. The prior chair of the ACCC has made a number of public comments that the ACCC prefers divestitures to occur before the completion of a merger (i.e., as a fix-it-first type of remedy). The ACCC has also warned merger parties that offering a divestiture remedy late in the process without giving the ACCC time to consider the remedy or find an upfront purchaser may result in the ACCC deciding that the undertaking is not acceptable, as it will be unable to adequately assess the risk and uncertainty associated with the undertaking.
The ACCC’s objective in accepting an 87B Undertaking is to resolve a potential competition concern. In relation to divestiture undertakings, the ACCC will assess the proposed divestiture undertaking to determine whether it is adequate to address competition concerns raised by the potential transaction and to address the following types of risks:
- composition risk: is the scope of the divestiture package sufficient to attract a suitable purchaser and to allow that purchaser to operate effectively?
- purchaser risk: is a suitable purchaser available and capable of operating the business?
- asset deterioration risk: will the divestiture package deteriorate in competitive value prior to completion of the divestment?
Depending on the timing of the sale and the nature of the assets to be divested, other key considerations that may be relevant in the divestiture undertaking include:
- the preservation of the assets making up the divestiture package (including ring-fencing measures);
- the appointment of an independent manager to maintain the value of the divestiture business;
- hold separate arrangements (including operational and financial separation, separation of management, decision-making and books and records); and
- access arrangements, especially when the divestiture business is vertically integrated into the merged entity.
Although the ACCC’s view is that behavioural undertakings will rarely be sufficient to address its competition concerns, it may accept a behavioural undertaking if structural remedies are not suitable. The ACCC’s general view is that behavioural undertakings can often be inflexible and unresponsive to market changes over time and also require monitoring for longer, which increases both compliance and monitoring costs.
There have been a couple of recent exceptions to this general approach. In 2023, the ACCC accepted behavioural undertakings as a condition of granting authorisation to the proposed merger between Armaguard and Prosegur, the two largest suppliers of cash-in-transit services in Australia (comprising cash transport, management and processing services) predominantly to banks, retailers and independent ATM operators. While the ACCC was not satisfied that the proposed merger would not substantially lessen competition, it considered that the undertaking would increase the public benefits and reduce some of the public detriments likely to result from the merger, ensuring that the merger would be likely to result in a public benefit that would outweigh the likely public detriment. The ACCC accepted that without the merger, either of the parties were likely to rapidly exit the cash-in-transit market in the near future, leading to disruption in the availability of cash for customers and the broader public. The undertaking is effective for three years and includes commitments to:
- limit the merged entity’s ability to increase prices and reduce service levels for new and existing customers;
- continue servicing all locations currently serviced;
- maintain a register of surplus personnel, equipment and sites available to third-party cash-in-transit providers; and
- provide certain services to independent ATM operators and to third-party cash-in-transit providers.
In addition, the ACCC also accepted behavioural undertakings given by AP+ when granting authorisation to the proposed amalgamation of Australia’s payment services providers, BPAY Group Holding Property Ltd and its subsidiaries (together, BPAY), eftpos Payments Australia Ltd (eftpos) and New Payments Platform Australia Ltd (NPPA) in 2021. The undertakings related to ensuring the availability of eftpos, the domestic debit card scheme, and of least cost routing, to address the ACCC’s concerns that the amalgamation may result in a substantial lessening of competition for the routing of debit card payments due to a potential reduction in support for eftpos from the major banks or AP+.
A behavioural undertaking was also accepted in conjunction with a structural undertaking in 2019 in respect of ANZ Terminal Property Ltd’s proposed acquisition of GrainCorp Liquid Terminals Australia Property Ltd.
ACCC process for merger undertakings
The ACCC expects the relevant merger party (usually the purchaser) to offer an 87B Undertaking based on its standard form and does not accept changes to the majority of the operational provisions. The ACCC routinely requires a submission explaining why any amendments to the standard form of ACCC wording are necessary.
Once an 87B Undertaking is offered, the ACCC typically conducts public market inquiries (which can be targeted) with interested parties to test whether the proposed remedy is adequate to address competition concerns raised by the potential transaction and the level of composition, purchaser and asset deterioration risk associated with the proposed divestiture package. If there is feedback from interested parties, it is often raised with the merger parties and the ACCC might suggest amendments to the proposed 87B Undertaking to address any issues. The ACCC typically allows two to three weeks to conduct these inquiries.
When an undertaking is offered during a merger review, the ACCC’s indicative timeline will generally be adjusted to allow for market inquiries and further internal analysis.
If the merger is being considered in more than one jurisdiction, the ACCC will generally consult with the relevant overseas competition agencies. The ACCC is a party to a series of cooperation agreements with other competition agencies, and it actively engages with its counterparts when assessing theories of harm and appropriate remedies in multi-jurisdictional mergers.
In assessing an 87B Undertaking, the ACCC tends to consider the following:
- efficacy in dealing with competition concerns: the ACCC will consider whether the undertaking appropriately addresses its competition concerns. The ACCC will also take into account relevant practical matters, such as a consideration of the risks that the undertaking poses and whether the level of risks involved are acceptable;
- least burdensome remedy: the ACCC will seek to implement a remedy that addresses the competition concerns but does not go further;
- conceptual simplicity: the ACCC considers whether the design of the undertaking is as simple as possible, but this must be balanced with enough detail to deal with the practical complexities and to ensure it is legally enforceable;
- cost of monitoring, enforcement and implementation: if the costs of a remedy outweigh the benefits of a merger, this does not influence the ACCC’s decision to oppose or not oppose a proposed merger. However, these issues are relevant to the ACCC’s consideration of an undertaking;
- timeliness: the ACCC generally accommodates tight commercial time frames in exchange for merger parties negotiating in good faith to fully address the ACCC’s competition concerns; and
- impact on third parties: in addition to considering the effects of the merger and proposed undertakings in the relevant markets, the ACCC will consider whether third parties are affected (for example, an undertaking should not be inconsistent with existing contractual obligations between a merger party and a third party). Market inquiries are relevant to considering this issue.
Variation of merger undertakings that have already been accepted
A merger party may vary or withdraw an 87B Undertaking, but only with the consent of the ACCC. This will involve writing to the ACCC with the specific request to vary or withdraw the 87B Undertaking with reasons for the ACCC to consider. The reasons for the request could be that market circumstances have changed or that compliance with the 87B Undertaking is found to be too difficult or impractical. For example, in Qube Holdings Limited’s (Qube) proposed acquisition of a 50 per cent shareholding in Amalgamated Terminals Property Ltd (AAT), the parties gave an 87B Undertaking to allow open access for AAT’s Appleton Dock general cargo facility at the Port of Melbourne. The ACCC consented to vary this for three years since changing conditions at Appleton Dock meant that Qube competed with the Port of Geelong for general cargo.
More recently, the ACCC consented to various pro forma variations to the undertaking given by AP+ in relation to the proposed amalgamation of BPAY, eftpos and NPPA. Any variation is made publicly available on the ACCC website. When making a variation decision, the ACCC will consider whether the variation remains in alignment with the purpose of the original 87B Undertaking, along with other information available to it, including any market feedback on competition in the relevant markets. In the example above, Qube’s variation request had received mixed market feedback on the competition between Appleton Dock and the Port of Geelong. As such, the ACCC weighed this against the limited timing and the audit and compliance provisions in place.
The ACCC may also waive the need to comply with an 87B Undertaking. In the example above, AAT undertook not to allow an employee conducting specific functions to simultaneously be engaged by Qube. A limited waiver to allow one AAT employee to be engaged by Qube was granted, noting certain reporting and compliance requirements. Waiver decisions are also made publicly available on the ACCC website. A decision to amend an 87B Undertaking is open to review by the court.
Monitoring of merger undertakings
The ACCC will only accept an 87B Undertaking that has an effective mechanism that allows for the merger parties’ conduct to be monitored for potential breaches of the 87B Undertaking.
The ACCC’s monitoring activity varies depending on the 87B Undertaking, but generally involves an ACCC-approved independent auditor and periodic reporting by the auditor. Recent examples include the following.
- In September 2022, in relation to THL Group’s acquisition of Apollo Tourism, in response to the ACCC’s concerns, the parties proposed to divest a majority of Apollo’s four to six berth motorhomes in its Australian rental fleet to Jucy Group. The ACCC accepted the undertaking and the divestiture to Jucy at the same time. An ACCC-approved independent auditor was required to provide an audit report to the ACCC every fortnight until the divestiture was completed, then quarterly until the merged entity had fulfilled all obligations pursuant to the undertaking (as to be confirmed by the ACCC).
- In May 2022, in relation to the acquisition of Waterlogic Group Holdings Limited by the Culligan Group, the ACCC accepted an undertaking from Culligan’s parent company, Osmosis Buyer Limited, to divest its instant water tap business ‘Billi’. An ACCC-approved independent auditor was required to provide an audit report to the ACCC every month until one month after the divestiture was completed.
- In September 2020, in Mylan NV’s merger with Pfizer Inc’s Upjohn division to create Viatris, in which the merger parties undertook to divest the brand, assets and rights associated with pharmaceutical products based on certain molecules to address the ACCC’s competition concerns in relation to the supply of pharmaceutical products based on these molecules. The purchaser of the divestiture business was approved at the time the 87B Undertaking was accepted by the ACCC. An ACCC-approved independent auditor was required to provide an audit report to the ACCC every month until the divestiture was completed, then quarterly until the merged entity had fulfilled all obligations pursuant to the undertaking (as to be confirmed by the ACCC).
If an independent auditor identifies a failure to comply with the obligations of an 87B Undertaking, it may cause the ACCC to commence court action to enforce the undertaking. In Toll Holdings Ltd v. ACCC, questions about Toll’s compliance with its undertaking were first raised in the independent auditor’s reports.
Enforcement of merger undertakings
If the ACCC considers that the merger parties have breached an 87B Undertaking, it may make an application to the Federal Court seeking orders to enforce the undertaking. The Court has the power to make any orders it considers appropriate, which may include:
- directing compliance with the 87B Undertaking;
- directing that the Commonwealth be paid in the amount of the financial benefit reasonably attributable to the breach; and
- compensation for other parties who have suffered damage as a result of the breach.
The ACCC has, and will seek, to enforce 87B Undertakings in relation to mergers if a party has allegedly breached the undertaking, as illustrated by the following two examples.
- In 2006, the ACCC accepted an 87B Undertaking by Alinta in relation to its acquisition of Australian Pipe Trust. The 87B Undertaking contained an obligation to structurally separate the merger parties’ interests in the Dampier to Bunbury Natural Gas Pipeline (DBNGP Holdings) and that no member of staff of Alinta be involved in commercial negotiations between the Pipeline and other shippers. The ACCC commenced proceedings when an Alinta employee was seconded to DBNGP Holdings. The parties agreed to settle. The court declared that Alinta had breached its undertaking and ordered Alinta to pay the ACCC’s costs of the proceedings, fixed at A$250,000.
- In Toll v. ACCC, the court found that Toll had breached its undertaking. Toll was obliged not to share management or employees with Asciano Limited. A Toll subsidiary entered into a labour hire contract with Asciano whereby casual employees of the Toll subsidiary would be instructed to supply labour to Asciano. On the interpretation of the undertaking, the court concluded that the arrangement would be a breach of the undertaking and ordered Toll to pay the ACCC’s costs.
A third party does not have the right to enforce an 87B Undertaking under the CCA, although a breach of an undertaking could be regarded as unlawful for the purposes of tort law.
In the cross-border merger context, the ACCC’s jurisdiction under the CCA is limited to whether the parties are either incorporated or carrying on a business in Australia, unless the parties voluntarily submit to the ACCC’s jurisdiction.
Cooperation with other regulators
The ACCC is a party to a series of cooperation agreements with other agencies that allow sharing of intelligence, case theories and investigative techniques.
Given the close geographical relationship, the ACCC often coordinates with the New Zealand Commerce Commission (NZCC), with which it has a protocol in place for the review of trans-Tasman mergers. There is additionally a cross-appointment arrangement between the ACCC and NZCC that permits members of a regulator to have full access to all confidential information held by the other regulator.
The ACCC also has cooperation arrangements with agencies such as the Competition Bureau of the Government of Canada, the UK’s CMA, the European Commission, the US Department of Justice (Antitrust Division), the US Federal Trade Commission and, most recently, the Italian Competition Authority.
The ACCC is also often notified of proposed mergers by other Australian regulators, such as the FIRB. Proposals are assessed by the FIRB to ensure they are not contrary to the national interest. The FIRB may refer a transaction to the ACCC to seek its views, as competition is a relevant factor in considering the national interest test. As such, in mergers where parties are required to obtain FIRB approval, it is prudent for the parties to proactively notify the ACCC, even if there are no obvious competition issues.
In the context of a merger review, when the transaction is also being considered by international agencies, the ACCC may consult with those agencies to inform its own review – see, for example, the ACCC’s cooperation with the UK’s CMA, US’s Department of Justice, European Commission and New Zealand Commerce Commission on Cargotec’s proposed acquisition of Konecranes in 2022. If those discussions do not involve protected information, the ACCC can coordinate with other agencies without permission from the merger parties. However, if the ACCC wishes to exchange confidential information with international agencies, it will generally seek a confidentiality waiver from relevant parties. The ACCC has a standard form waiver that it will provide to the merger parties when appropriate.
Remedies in multi-jurisdictional transactions
In cross-border transactions, the ACCC’s approach to remedies can be shaped by the remedies obtained by an international regulator. In some cases, the ACCC may elect not to require a remedy in Australia if commitments have already been made to another regulator and its competition concerns can be satisfied by those commitments. Some examples of international considerations include the following.
- In relation to Microsoft Corporation’s proposed acquisition of Activision Blizzard Inc, as at the time of writing, the ACCC has suspended its review timeline while it engages with overseas regulators.
- In relation to Sika AG’s proposed acquisition of MBCC Group in 2023, the ACCC accepted an undertaking whereby Sika committed to divesting the MBCC business in Australia and also committed to the European Commission to the structural divestiture of MBCC’s chemical admixture business. The ACCC considered that the divestiture package would ensure that two key competitors remained in Australia and that they would have access to global research and development networks.
- In relation to Bayer AG’s acquisition of Monsanto Company in 2018, the ACCC considered that a number of divestment commitments had already been made to the European Commission. The commitments were sufficient to remove the overlap in the ACCC’s markets of concern (being the supply of weed management systems for canola and the supply of vegetable seeds) so that an additional remedy was not required.
However, the ACCC does not follow the approach of other regulators in all cases. If the ACCC is not satisfied that a remedy from a foreign jurisdiction would resolve competition concerns in Australia, it may impose its own. For example, in relation to Elanco Animal Health Incorporated’s acquisition of Bayer Aktiengesellschaft’s animal health business in 2020, the ACCC accepted an 87B Undertaking that included a different product for divestment as compared with other jurisdictions involved in the transaction owing to competition concerns that were specific to Australia.
In 2020, the ACCC did not accept a behavioural undertaking offered by Google in relation to its acquisition of Fitbit, despite a similar undertaking being accepted by the European Commission.
In its joint statement with the CMA and Germany’s Federal Cartel Office, the ACCC highlighted the need for a common understanding across competition agencies about the need for rigorous and effective merger enforcement. In particular, the regulators specify the need for effective remedies given the high levels of concentration across various markets in the United Kingdom, Germany and Australia and the fast-paced development of the digital world. It may be that greater international cooperation between these regulators and in these markets is to be expected in the future.
The offer and acceptance of 87B Undertakings to address theories of harm in mergers is an established practice in Australia.
Although there has been a consistent preference for structural undertakings, Armaguard/Prosegur and BPAY/eftpos/NPPA demonstrate some openness on the part of the ACCC to entertain accepting behavioural remedies to resolve concerns. The ACCC is likely to continue to face questions as to whether a preference for structural remedies remains fit for purpose in addressing emerging theories of harm in the digital space concerning access and use of data as well as interoperability, in particular since the European Commission has signalled a willingness to accept behavioural commitments.
Only a minority of transactions notified to the ACCC involve the offer and acceptance of 87B Undertakings. Experienced counsel can provide invaluable insight to merging parties in Australia in relation to the types of remedies the ACCC generally accepts, leveraging remedies obtained by international regulators (if any), and help the engagement with the ACCC on the remedies proposal to run as smoothly and efficiently as possible.
 Susan Jones, Andrew Low and Jeremy Jose are partners and Amelia McKellar is special counsel at Gilbert + Tobin. The authors wish to thank lawyers Sofia Evans and Chris Goutama for their assistance with the chapter.
 Australian Competition and Consumer Commission [ACCC] and Australian Energy Regulator [AER], Annual Report 2021-22 (October 2022) [Annual Report], 58, available at https://www.accc.gov.au/system/files/ACCC%20and%20AER%20annual%20report%202021-22.pdf.
 ACCC, ‘Linfox Armaguard Pty Ltd and Prosegur Australia Holdings Pty Ltd proposed merger’ (13 June 2023), available at https://www.accc.gov.au/public-registers/mergers-registers/merger-authorisations-register/linfox-armaguard-pty-ltd-and-prosegur-australia-holdings-pty-ltd-proposed-merger.
 ACCC, ‘Proposed amalgamation of BPAY, eftpos and NPPA’ (9 September 2021), available at https://www.accc.gov.au/public-registers/mergers-registers/merger-authorisations-register/proposed-amalgamation-of-bpay-eftpos-and-nppa.
 ACCC, ‘Mylan N.V. and Upjohn Inc. - proposed merger’ (10 September 2020), available at https://www.accc.gov.au/public-registers/mergers-registers/public-informal-merger-reviews/mylan-nv-and-upjohn-inc-proposed-merger; ACCC, ‘Elanco Animal Health Incorporated - Bayer Aktiengesellschaft’s animal health business’ (9 July 2020), available at https://www.accc.gov.au/public-registers/mergers-registers/public-informal-merger-reviews/elanco-animal-health-incorporated-bayer-aktiengesellschaft%E2%80%99s-animal-health-business.
 Section 50A of the CCA is intended to apply to acquisitions that occur wholly outside of Australia but have an effect on a market in Australia, but it has never been relied upon.
 See, e.g., Competition and Consumer Act 2010 (Cth) ss 76, 80 and 81 [CCA].
 Sarah-Jane Tasker, ‘ACCC gets more demanding in merger crackdown’, The Australian (5 August 2017), available at https://www.theaustralian.com.au/business/accc-gets-more-demanding-in-merger-crackdown/news-story/10d1fe8ec91a5129feb5e009ce7a42a8.
 The ACCC will not conduct a confidential review for mergers that are public knowledge, purely speculative or hypothetical. As the ACCC’s view is formed without the benefit of information from market enquiries, the level of comfort provided by the confidential clearance is not as high as that provided under a public clearance. The process typically takes between two and four weeks but may be longer for complex mergers.
 ACCC, Merger Guidelines (November 2017) [Merger Guidelines], at 3, available at https://www.accc.gov.au/system/files/Merger%20guidelines%20-%20Final.PDF.
 Gilbert + Tobin, ‘Update on the 2017 Harper Reforms’ (18 October 2017), available at https://www.gtlaw.com.au/insights/harper-changes-competition-law-pass-through-parliament.
 See ACCC, ‘Merger authorisations register’, available at https://www.accc.gov.au/public-registers/mergers-registers/merger-authorisations-register.
 ACCC, Merger Authorisation Guidelines (October 2018) [Authorisation Guidelines], at 6, available at https://www.accc.gov.au/system/files/Merger%20Authorisation%20Guidelines%20-%20October%202018.pdf.
 CCA (see footnote 7, above), s 90(7).
 ACCC, ‘Reasons for Determination: Application for merger authorisation lodged by Armaguard and Prosegur in respect of the merger of their respective cash-in-transit and device monitoring and maintenance and ATM businesses’, at 107-108, available at https://www.accc.gov.au/system/files/public-registers/documents/Reasons%20for%20Determination%20-%2013.06.23%20-%20PR%20-%20MA1000022%20Armaguard%20Prosegur_0.pdf.
 Although the ACCC’s determination regarding one of these applications indicated that while it was satisfied no substantial lessening of competition would arise (meaning it was not required to consider the ‘net public benefit’ test), it was nevertheless satisfied that the public benefit was likely to outweigh any likely detriment. See ACCC, ‘Determination: Application for merger authorization lodged by Industry Committee in respect of the proposed amalgamation of ownership of BPAY Group Holding Pty Ltd, eftpos Payments Australia Limited and NPP Australia Limited’ (9 September 2021), at 124, available at https://www.accc.gov.au/system/files/public-registers/documents/Determination%20-%2009.09.21%20-%20PR%20-%20MA1000020.pdf.
 Authorisation Guidelines (see footnote 13, above), 39.
 Foreign Investment Review Board [FIRB], Guidance 11: Protecting the national interest: guiding principles for developing conditions (Guidance Note, 1 July 202317 December 2020), at 9, available at https://firb.gov.au/sites/firb.gov.au/files/guidance-notes/G11-Principles_for_developing_conditions.docx; https://firb.gov.au/sites/firb.gov.au/files/guidance-notes/ G11Principlesfordevelopingconditions_0.pdf; ACCC, Informal Merger Review Process Guidelines (November 2017), at 9, available at https://www.accc.gov.au/business/mergers/informal-merger-reviews/.
 ACCC v. Pacific National  FCA 699.
 See, for example, Undertaking to the Australian Competition and Consumer Commission for the purposes of Section 87B by The Australian Gas Light Company and GEAC Operations Pty Ltd (3 March 2004), available at https://www.accc.gov.au/public-registers/undertakings-registers/section-87b-undertakings-register/the-australian-gas-light-company-s87b-undertaking.
 Competition and Markets Authority, Australian Competition and Consumer Commission and Bundeskartellamt, Joint statement on merger control enforcement (20 April 2021), at 4, available at https://www.accc.gov.au/system/files/Joint%20statement%20-%20merger%20control%20enforcement.pdf.
 Merger Guidelines (see footnote 10, above), at 64; ACCC, ‘Law Council Competition and Consumer Law Workshop opening address’ (9 September 2022), available at https://www.accc.gov.au/about-us/media/speeches/law-council-competition-and-consumer-law-workshop-opening-address. For example, in Bingo’s acquisition of Dial-a-Dump in 2019, the ACCC accepted an undertaking that required Bingo to divest its Banksmeadow waste processing facility as a condition precedent to the authorisation: ACCC, ‘Bingo’s acquisition of Dial-a-Dump not opposed, subject to divestiture undertaking’ (28 February 2019), available at https://www.accc.gov.au/media-release/bingo%E2%80%99s-acquisition-of-dial-a-dump-not-opposed-subject-to-divestiture-undertaking.
 ibid., 59.
 ACCC, ‘Reasons for Determination: Application for merger authorization lodged by Armaguard and Prosegur’ (see footnote 15 above), at 107–108.
 ACCC, ‘Proposed amalgamation of BPAY, eftpos and NPPA’ (see footnote 4, above).
 ACCC, ‘ANZ Terminals Pty Ltd proposed acquisition of GrainCorp Liquid Terminals Australia Pty Ltd’ (15 November 2019), available at https://www.accc.gov.au/public-registers/mergers-registers/public-informal-merger-reviews/anz-terminals-pty-ltd-proposed-acquisition-of-graincorp-liquid-terminals-australia-pty-ltd.
 Merger Guidelines (see footnote 10, above), at 59.
 ibid., 58.
 ibid., 59.
 ibid., 58.
 Tim Grimwade, ‘How to Obtain Approval for Difficult Mergers and Acquisitions – And How You Won’t’ (Speech, Lexis Nexis Trade Practices Law Conference, 18 October 2006), at 7, available at https://www.accc.gov.au/system/files/How%20to%20obtain%20approval%20for%20difficult%20mergers%20and%20acquisitions.pdf.
 Merger Guidelines (see footnote 10, above), at 59.
 CCA (see footnote 7, above), s 87B(2).
 ACCC, ‘ACCC allows variations to access undertaking for AAT terminals’ (Media release 120/18, ACCC, 28 June 2018), available at https://www.accc.gov.au/media-release/accc-allows-variations-to-access-undertaking-for-aat-terminals.
 ACCC, ‘Proposed amalgamation of BPAY, eftpos and NPPA Undertaking’ (8 September 2021), available at https://www.accc.gov.au/public-registers/undertakings-registers/proposed-amalgamation-of-bpay-eftpos-and-nppa-undertaking.
 ACCC, Letter to ATT re Qube/AAT s87B undertaking – limited waiver request for ring fenced personnel provisions (26 March 2018), available at https://www.accc.gov.au/system/files/public-registers/documents/MER18%2B3263.pdf.
 Australian Petroleum Pty Ltd v. ACCC (1997) 73 FCR 75.
 ACCC, THL Group (Australia) Pty Ltd - Apollo Tourism & Leisure Ltd, https://www.accc.gov.au/public-registers/mergers-registers/public-informal-merger-reviews/thl-group-australia-pty-ltd-apollo-tourism-leisure-ltd.
 ACCC, Culligan Group - Waterlogic Group Holdings Limited, https://www.accc.gov.au/public-registers/mergers-registers/public-informal-merger-reviews/culligan-group-culligan-waterlogic-group-holdings-limited-waterlogic.
 ACCC, ‘Section 87B of the Competition and Consumer Act: Guidelines on the use of enforceable undertakings by the Australian Competition and Consumer Commission’ (April 2014), at 7, available at https://www.accc.gov.au/system/files/Guide%20to%20Section%2087B.pdf.
 ACCC, ‘ACCC will not oppose Transurban consortium WestConnex bid following undertaking’ (Media Release MR170/18, ACCC, 30 August 2018), available at https://www.accc.gov.au/media-release/accc-will-not-oppose-transurban-consortium-westconnex-bid-following-undertaking.
 CCA (see footnote 7, above), ss 87B(3)–(4).
 ACCC, ‘Federal Court declares Alinta breached s87B undertakings’ (Media release MR 235/07, ACCC, 29 August 2007), available at https://www.accc.gov.au/media-release/federal-court-declares-alinta-breached-s87b-undertakings; Federal Court of Australia, Orders of Justice Weinberg VID1014/2006 (29 August 2007), available at https://www.comcourts.gov.au/file/Federal/P/VID1014/2006/3498353/event/25234684/document/111115.
 This case is peculiar in that the proceeding was commenced by Toll and not the ACCC. Toll made an application to the court to declare that its conduct was not in breach of its Section 87B undertaking. Nevertheless, it is an example of the court enforcing a Section 87B undertaking.
 Dresna Pty Ltd v. Misu Nominees Pty Ltd  FCAFC 169,  (Kiefel and Jacobson JJ).
 Organisation for Economic Co-operation and Development [OECD], ‘Remedies in cross-border merger cases’ (2013), at 24, available at https://www.oecd.org/daf/competition/Remedies_Merger_Cases_2013.pdf.
 ACCC, ‘ACCC’s enforcement and compliance policy update 2022-23 address’ (3 March 2022) on mergers: https://www.accc.gov.au/about-us/media/speeches/acccs-enforcement-and-compliance-policy-update-2022-23-address; ACCC, ‘Competition agencies to coordinate on cross-border investigations’ (3 September 2020), available at https://www.accc.gov.au/media-release/competition-agencies-to-coordinate-on-cross-border-investigations-0.
 ACCC, ‘ACCC/NZCC in-principle agreement to cooperative trans-Tasman mergers review protocol’ (24 July 2006), available at https://www.accc.gov.au/media-release/accc/nzcc-in-principle-agreement-to-cooperative-trans-tasman-mergers-review-protocol.
 OECD (see footnote 46, above), at 20.
 ACCC, ‘Treaties and agreements’, available at https://www.accc.gov.au/about-us/international-relations/treaties-agreements.
 ACCC, ‘Informal Merger Review Process Guidelines’ (November 2017) [Informal Review Guidelines], at 6, available at https://www.accc.gov.au/system/files/D17-156292%20Informal%20Merger%20Review%20Process%20Guidelines%20-%20updated%20November%202017_0.PDF.
 FIRB, Guidance 11: Protecting the national interest: guiding principles for developing conditions (17 December 2020), at 2, available at https://firb.gov.au/sites/firb.gov.au/files/guidance-notes/G11Principlesfordevelopingconditions_0.pdf.
 See, e.g., ACCC, Cargotec and Konecranes merger cancelled (Media release, 30 March 2022) https://www.accc.gov.au/media-release/cargotec-and-konecranes-merger-cancelled.
 ‘Protected information’ is defined under s 155AAA of the CCA. It includes information given in confidence to the ACCC relating to its investigation, obtained using its information-gathering powers under s 155 or given in confidence to the ACCC by a foreign government body under its merger control laws.
 Informal Review Guidelines (see footnote 51, above), at 19. S 155AAA of the CCA does contemplate a process by which the ACCC can disclose confidential information of the parties with consent or as authorised by regulations. However, obtaining consent by confidentiality waiver is the preferred approach as it is simpler and aligns with the procedures of most international agencies.
 Informal Review Guidelines (see footnote 51, above), at 19. Note that in transactions with multiple jurisdictions, what is acceptable in a jurisdiction outside Australia may not be acceptable to the ACCC. The ACCC generally does not accept restrictions on internal uses of confidential information consistent with the ACCC’s statutory functions. OECD (see footnote 46, above), at 19.
 OECD (see footnote 46, above), at 19.
 ACCC, Microsoft Corporation – Activision Blizzard Inc, available at https://www.accc.gov.au/public-registers/mergers-registers/public-informal-merger-reviews/microsoft-corporation-activision-blizzard-inc; CMA, Anticipated acquisition by Microsoft of Activision Blizzard, Inc: Final report (26 April 2023), at 372 [11.133]-[11.134]; In the Matter of Microsoft/Activision Blizzard, Order Withdrawing Matter from Adjudication (20 July 2023) https://www.ftc.gov/legal-library/browse/cases-proceedings/2210077-microsoftactivision-blizzard-matter; EC, ‘Mergers: Commission clears acquisition of Activision Blizzard by Microsoft, subject to conditions’ (Media release, 15 May 2023) available at https://ec.europa.eu/commission/presscorner/detail/en/ip_23_2705.
 ACCC, Sika AG - proposed acquisition of MBCC Group: Public Competition Assessment (3 May 2023) at ,  https://www.accc.gov.au/system/files/public-registers/documents/Sika%20-%20MBCC%20-%20Public%20Competition%20Assessment.pdf.
 ACCC, ‘Bayer AG – proposed acquisition of Monsanto Company’ (22 March 2018), available at https://www.accc.gov.au/public-registers/mergers-registers/public-informal-merger-reviews/bayer-ag-proposed-acquisition-of-monsanto-company.
 Competition and Markets Authority, Australian Competition and Consumer Commission and Bundeskartellamt, Joint statement on merger control enforcement (20 April 2021), at 1, available at https://www.accc.gov.au/system/files/Joint%20statement%20-%20merger%20control%20enforcement.pdf.
 ACCC, ‘Elanco Animal Health Incorporated - Bayer Aktiengesellschaft’s animal health business’ (9 July 2020), available at https://www.accc.gov.au/public-registers/mergers-registers/public-informal-merger-reviews/elanco-animal-health-incorporated-bayer-aktiengesellschaft%E2%80%99s-animal-health-business. The other relevant jurisdictions included United States, European Union and New Zealand.