SENNA

Merger Overhaul Threatens Australian Company Rescues
By Senna Analyst

SYDNEY - Radical changes to Australia's merger clearance laws set to take effect on January 1 could seriously undermine the country's ability to save struggling companies, experts warn.

The new rules will significantly increase the time and costs required to obtain approval from the Australian Competition and Consumer Commission (ACCC) for mergers and acquisitions. This poses a major obstacle for turnaround specialists and insolvency practitioners looking to rescue distressed firms through consolidation or sale.

"The extra costs and time it will take to get ACCC clearance or a waiver will make it harder to save struggling companies, particularly active trading companies," said Genevieve Sexton, a partner at law firm Arnold Bloch Leibler.

For decades, Australia's formal restructuring regime has prioritized the rapid rejuvenation of insolvent firms wherever possible. The new merger framework threatens to upend this established approach, according to industry sources.

Under the planned reforms, the ACCC will have the power to block deals that reduce competition, even if the transaction would save a company from collapse. Previously, the regulator was required to weigh the public benefits of a rescue against any competitive harm.

"This is a real and deeply problematic impediment to the effectiveness of turnaround and restructuring in Australia," Sexton said. "It will make it much harder to execute the kinds of transactions that have historically been crucial to saving businesses."

The changes come as the Australian economy faces mounting headwinds, with rising interest rates, soaring inflation and growing recession risks. Experts warn the merger overhaul could hamstring efforts to preserve jobs and maintain economic activity during a downturn.

Industry groups have lobbied the government to carve out an exemption for distressed M&A, but so far their pleas have fallen on deaf ears. With the new rules just weeks away, restructuring professionals are bracing for a more challenging environment ahead.

"This is a real blow that threatens to undermine a core part of our insolvency framework," said one senior advisor at a leading Australian law firm, who requested anonymity to discuss the sensitive issue. "It's a concerning development at a very uncertain time for the economy."