Australia’s Merger Reforms: what it means for commercial real estate deals

The Australian Government has proposed a new merger control regime replacing the existing voluntary informal notification and authorisation process regimes with a mandatory and suspensory clearance regime. Pleasingly, the Government has suggested that “business as usual” real estate deals will be exempt. However, the detail on this has not yet been announced. Based on the legislation as it stands, many high value commercial real estate deals would be caught by the regime. Retail investors should also be conscious that, with the Government’s focus on competition in the supermarket sector, targeted notification thresholds have been proposed to mandate that all mergers in the supermarket sector need ACCC clearance (which may include transactions involving leases).

Background

On 10 October 2024, the Government introduced the draft Bill for the new regime into Parliament.  The Bill sets out the legal framework, including what types of transactions cannot proceed without ACCC clearance, the timeframes for the ACCC’s review and the appeal rights from any ACCC decision.  

The Bill has been referred to the Senate Economics Legislation Committee, with the Committee’s report due on 13 November 2024.

For a summary of the Bill’s key features, see our updates here and here.

What real estate deals will need ACCC clearance?

The table below provides some illustrative examples of how the proposed monetary thresholds may be satisfied in the real estate sector.

There are still some uncertainties about how they will be interpreted (including how “turnover” is to be calculated, what constitutes the “acquirer group”, who are the “merger parties”, and how the turnover of previous acquisitions should be aggregated for the purposes of the thresholds). 

For example:

• The consultation paper suggested that the turnover of the vendor of the transaction should not be included when assessing whether the thresholds are met but this is not clear in the latest proposal from Treasury (which does not define “merger parties”).
• Similarly, identifying the “acquirer group” will be more complicated for structures involving funds and partnerships. For example, if a large property group establishes a wholesale fund, it is not clear whether the balance sheet turnover of the property group will be included when assessing whether the wholesale fund meets the turnover thresholds.

*  3 year cumulative turnover threshold – aggregation of previous acquisitions

Acquisitions within the previous 3 years in the same product or service market/s (irrespective of geographic location) are aggregated for the purposes of assessing whether an acquisition meets the monetary turnover threshold, regardless of whether those acquisitions were themselves individually notifiable.  The product or service market in real estate sector may simply be similar commercial properties. 

The Government has also said it will use powers to set targeted notification thresholds to mandate that every merger in the supermarket sector must be notified to the ACCC (which could capture transactions involving leases).

Proposed exemptions for residential property developments and some commercial property acquisitions

The Government has announced that it intends to include exemptions from the obligation to obtain ACCC clearance for land acquisitions involving:

• residential property development, and
• acquisitions by any business that is primarily engaged in buying, selling, or leasing property and does not intend to operate a commercial business other than leasing property,

subject to any other targeted notification thresholds (such as the proposed threshold for any merger in the supermarket sector).   

However, these exemptions are not reflected in the text of the Bill and will be implemented by separate regulations or Ministerial Instrument.

This means the scope of these exemptions is currently unclear.  For example, it is unclear whether a newly established SPV within a large corporate group caught by the turnover thresholds could be a business that is primarily engaged in buying, selling, or leasing property.

What should we be doing now?

If you are a participant in the real estate capital transactions market, it is a good idea to start thinking about whether your group would meet the turnover thresholds outlined above and how you might satisfy an exemption or otherwise address this in a competitive bid.

We can help with this – please just reach out.

The new regime is expected to commence on 1 January 2026, with voluntary notifications open from 1 July 2025.