Full Cost Recovery Proposed for Application Fees Under Australia's Mandatory Merger Clearance Regime

In Brief

The Australian Treasury and the Australian Competition and Consumer Commission (ACCC) has released a consultation paper in which it proposes a full cost recovery regime for application fees under Australian's new mandatory merger clearance regime. 

The Australian Government is consulting briefly about the proposed fee structure prior to finalising its position and publishing a fees legislative instrument (which it expects to do before 30 June 2025).

The 2025/26 fees for the main substantive assessment are proposed to be as follows:

• Phase 1 assessment: AU$56,800; and
• Phase 2 assessment: AU$952,000.

Additional detail about the proposed fees across all types of applications is set out below.

The Government considers that its approach "reflects the resources required by the ACCC to efficiently carry out an assessment, and will ensure businesses that propose mergers for assessment, rather than taxpayers, bear the cost they impose on the community to assess that risk", and stated that "the fees will also ensure the ACCC is adequately resourced to undertake its expert administrative decision-making role and can efficiently administer the new system."

The Approach Taken by the Government

The Government noted that under the present informal clearance regime, the operational cost of merger control incurred by the ACCC is funded through consolidated revenue by taxpayers generally and is not imposed on the merger parties based on cost recovery principles.

In its consideration for the 2024/25 Budget, the Government made the decision to change this approach to a full cost-recovery model. The model will impose separate fees for each type of review, in order that they are scaled to the complexity, and in all likelihood competition law risk, associated with each type of review.

The approach taken has been based on five design principles aimed at "appropriately captur[ing] the costs to deliver the ACCC’s key regulatory merger activities while ensuring the overall fees system is efficient, equitable and transparent for parties and the ACCC to navigate." In brief, the design principles are:

• To Align Costs With Fees: The fee structure will be based on the complexity of review to ensure that it is the merger parties, not the public, that bear the cost of assessment–particularly intensive assessment;
• To Promote equity and Competition: The fee structure will be based on complexity of review while providing for exemptions in appropriate instances (e.g. for small businesses), in order that the fees are not a barrier to merger activity;
• To Promote Efficiency and Effectiveness: The fees will be set at a level that reflects the minimum and efficient resourcing necessary for the ACCC to carry out the assessment;
• To Minimise Regulatory and Administrative Burden: Clarity will be provided to parties about the fee rates and reasons for them; and
• To Ensure Transparency and Accountability: The ACCC will report on the operation of the regime (including the numbers of applications, waivers, Phase 1 and 2 determinations, timeline extensions etc), and will carry out annual reviews/consultations regarding fees. 

The Proposed Fee Structure

The full set of fees are set below and in the consultation paper as follows:

Interestingly, the consultation paper also sets out the "estimated volume of applications" expected by Treasury and the ACCC in the 2025/26 year–which are the numbers we have inserted in brackets in the above table.

Time will tell how realistic these numbers will prove to be–noting that they account for the 'voluntary' period for making applications from 1 July 2025 and the first six months of operation of the mandatory regime.

The quite high costs associated with the Phase 2 and Public Benefit Reviews (which Treasury and the ACCC expect to be in single digits in terms of numbers of applications) reflect the likely complexity of these matters and the likely use of:

• The ACCC's compulsory document and information gathering powers under section 155 of the Competition and Consumer Act, as well as the potential use of oral examinations under this power;
• The potential need to use quantitative analysis to inform the ACCC's assessment, and the need for the ACCC to source data from multiple sources to undertake that analysis (again potentially via compulsory notices); 
• The likely need to use both internal and external economic (including expert economists), industry and legal advisers to inform the ACCC's assessment of the proposed acquisition–including any remedies proposed by the merger parties; and 
• In the case of public benefit reviews, the likely need by the ACCC to undertake consumer, industry and economic engagement to 'test' the veracity of the public benefit claims–over and above the 'pure' competition analysis.

Exemptions, Future Changes (Indexation) and Reviews

As per the design principles, a fee exemption will be available for acquisitions made by small businesses so that fees are "not a disproportionate burden for those businesses"–small businesses having an aggregated turnover of less than AU$10 million.

Once the fees are set mid-year, they will then be indexed annually at the beginning of each financial year. The ACCC will also review its processes and costs estimate and the fees will be adjusted if required, so that that the charges reflect the cost of providing activities.

The Government finally noted that the costs associated with reviews of ACCC determinations under the mandatory merger clearance regime by the Australian Competition Tribunal will be subject to a separate Government consultation and decision.

The Government's consultation paper can be found here. 

We will update you further as this process is finalised. If you have any queries or would like to discuss further please do not hesitate to contact us.