Microsoft Corporation has completed its $69 billion acquisition of Activision Blizzard, Inc (Activision), the publisher of popular video games such as Call of Duty and World of Warcraft. The deal was initially blocked by the UK's Competition and Markets Authority (CMA), which raised concerns about Microsoft's dominance in cloud gaming should the transaction proceed. However, after Microsoft agreed to sell Activision's cloud streaming rights to Ubisoft Entertainment, the CMA granted its approval and cleared the final regulatory hurdle for the transaction.

In this article, Matt Krog sheds light on the regulatory process in Australia in relation to mergers and acquisitions that may affect competition in the market.

The Australian Competition and Consumer Commission (ACCC) is the competition regulator in Australia. The ACCC has the power to prevent or challenge mergers and acquisitions that may substantially lessen competition in any substantial market in Australia (or part thereof), under section 50 of the Competition and Consumer Act 2010 (CCA).

The ACCC does not have a mandatory pre-merger notification regime, but it encourages parties to seek it clearance before completing a merger or acquisition given its power to seek that a completed transaction be unwound.

With the ACCC, there are two ways to have a merger reviewed – informally or formally.

The informal review process is not set out in the ACCC and involves a transaction party voluntarily submitting a submission with relevant information to the ACCC, who will then consider whether a public or confidential review is required. The ACCC may then issue a statement of issues if it identifies any potential competition concerns, and may request further information or undertakings from the parties to satisfy itself that transaction will not substantially lessen competition. Following this, the ACCC will indicate whether it will oppose the proposed transaction. Importantly, even if an informal review is completed and the proposed transaction is not opposed by the ACCC, that does not prevent the ACCC from taking action at a later time (even after the transaction has been completed).

Alternatively, parties can seek formal clearance or authorisation from the ACCC for mergers that may raise competition issues in accordance with sections 88 to 90 of the CCA. Formal clearance is a binding decision by the ACCC that the merger or acquisition does not substantially lessen competition or that the merger or acquisition should be allowed on public benefit grounds (as set out in section 90(7) of the CCA). After receiving an application for an authorisation, the ACCC will:

1. conduct market inquiries, including inviting interested parties to lodge written (or oral) submissions commenting on the application
2. engage with the applicant, including seeking further information and evidence as needed, providing written feedback following market inquiries and inviting the applicant to lodge a written submission in response to interested party submissions, and
3. issue a written determination granting such authorisation as it considers appropriate (which may be subject to conditions) or dismissing the application.

Recent transactions that have been opposed by the ACCC include:

1. ANZ Banking Group’s acquisition of Suncorp Group’s banking arm;
2. Woolworths' proposed acquisition of the SUPA IGA in Karabar, NSW and its co-located Liquor Boss store; and
3. Qantas Airways’ proposed acquisition of Alliance Aviation Services Ltd.

Parties can apply to have the ACCC's decision reviewed by either the Australian Competition Tribunal under section 101 of the CCA or the Federal Court if on a question of law (judicial review) in accordance with the Administrative Decisions (Judicial Review) Act 1977 (Cth) or in the original jurisdiction of the Federal Court under section 39B of the Judiciary Act 1903 (Cth).