The Treatment of Efficiencies in Merger Review: An International Comparison

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8 Appendix A - Relevant Australian Merger Provisions
TRADE PRACTICES ACT 1974

Section 50 (1)-(3)

(1) A corporation must not directly or indirectly:

(a) acquire shares in the capital of a body corporate; or
(b) acquire any assets of a person;
if the acquisition would have the effect, or be likely to have the effect, of substantially lessening competition in a market.

(2) A person must not directly or indirectly:

(a) acquire shares in the capital of a corporation; or
(b) acquire any assets of a corporation;
if the acquisition would have the effect, or be likely to have the effect, of substantially lessening competition in a market.

(3) Without limiting the matters that may be taken into account for the purposes of subsections (1) and (2) in determining whether the acquisition would have the effect, or be likely to have the effect, of substantially lessening competition in a market, the following matters must be taken into account:

(a) the actual and potential level of import competition in the market;
(b) the height if barriers to entry to the market;
(c) the level of concentration in the market;
(d) the degree of countervailing power in the market;
(e) the likelihood that the acquisition would result in the acquirer being able to significantly and sustainably increase prices or profit margins;
(f) the extent to which substitutes are available in the market or are likely to be available in the market;
(g) the dynamic characteristics of the market, including growth, innovation and product differentiation;
(h) the likelihood that the acquisition would result in the removal from the market of a vigorous and effective competitor;
(i) the nature and extent of vertical integration in the market.

Section 50A(1)

(1) Where a person acquires, outside Australia, otherwise than by reason of the application of paragraph (8)(b), a controlling interest (the 'first controlling interest') in any body corporate and, by reason, but not necessarily by reason only, of the application of paragraph (8)(b) in relation to the first controlling, obtains a controlling interest ('the second controlling interest') in a corporation or each of two or more corporations, the Tribunal may, on the application of the Minister, the Commission or any other person, if the Tribunal is satisfied that -

(a) the person's obtaining of the second controlling interest would have the effect, or be likely to have the effect, of substantially lessening competition in a market; and
(b) the person's obtaining of the second controlling interest would not, in all the circumstances, result, or be likely to result, in such a benefit to the public that the obtaining should be disregarded for the purposes of this section, make a declaration accordingly.

Section 88

(9) Subject to this Part, the Commission may, upon application by or on behalf of a person:

(a) grant an authorisation to the person to acquire shares in the capital of a body corporate or to acquire assets of a person; or
(b) grant an authorisation to the person to acquire a controlling interest in a body corporate within the meaning of section 50A;
and, while such and authorisation remains in force:
(c) in the case of an authorisation under paragraph (a) - section 50 does not prevent the person from acquiring shares or assets in accordance with the authorisation; or
(d) in the case of an authorisation under paragraph (b) - section 50A does not, to the extent specified in the authorisation, apply in relation to the acquisition of that controlling interest.

Section 90

(9) The Commission shall not make a determination granting an authorisation under subsection 88(9) in respect of a proposed acquisition of shares in the capital body corporate or of assets of a person or in respect of the acquisition of a controlling interest in a body corporate within the meaning of section 50A unless it is satisfied in all the circumstances that the proposed acquisition would result, or be likely to result, in such a benefit to the public that the acquisition should be allowed to take place.

(9A) In determining what amounts to a benefit to the public for the purposes of subsection (9):

(a) the Commission must regard the following as benefits to the public ( in addition to any other benefits to the public that may exist apart from this paragraph):

(i) a significant increase in the real value of exports;
(ii) a significant substitution of domestic products for imported good; and

(b) without limiting the matters that may be taken into account, the Commission must take into account all other relevant matter that relate to the international competitiveness of any Australian industry.