This guide outlines the flip-up process at a high level and highlights some of the practical, corporate, tax, employee equity, and immigration issues that may arise as an Australian business expands into the United States.

To access the guide, click here.

The Action Plan focuses on four key enablers, which are discussed in more depth below:

1. Land use, location and local impact;
2. New energy supply and grid readiness;
3. Protecting drinking water and securing supply; and
4. Victorian jobs, skills and local benefits. 

The Action Plan is expressly designed to align with the Australian Government’s expectations of data centres and artificial intelligence (AI) infrastructure developers. The Victorian Government has flagged that it will continue to develop guidance with stakeholder input and will engage with the Commonwealth as it develops further legislation.  

Why the Action Plan Matters

Victoria is home to more than 50 data centre facilities, representing Australia’s second-largest data centre market. National data centre electricity demand is forecast to rise from around 3% to 6% by 2029 and around 12% to 13% by 2035 - 2036. In Victoria alone, electricity demand almost doubled over the 12-month period to mid-2026. This extreme growth is placing pressure on the State’s energy network. The Action Plan is Victoria’s response to these pressures and is intended to give local communities confidence that there are appropriate safeguards in place and separately give proponents predictable and clear development guidelines. The Action Plan emphasises early site selection and planning rather than attempting to mitigate poor planning later. 

Clear Requirements and Pathways

The Action Plan clarifies planning, infrastructure and environmental requirements before proponents commit capital. The Victorian Government is committing to a suite of facilitation measures to assist proponents and their advisors in the early stages of development, including the following:

• Investment Front Door, a single entry point for major data centre investments, enabling proponents to deal with one team rather than negotiating department by department.
• Pre-application information covering site identification, site due diligence, infrastructure availability and applicable requirements, for early feasibility assessment.
• Coordinated input from statutory corporations such as VicGrid, Energy Safe Victoria, WorkSafe Victoria, Fire Rescue Victoria and the Environment Protection Authority (EPA).
• Government mapping of Victoria’s energy, water and telecommunications capacity, to identify servicing constraints early.
• Investment Coordinator-General, as an escalation point for projects of state significance, resolving cross-agency delay and providing accountability.

Requirements will be published and reviewed to keep pace with technological change, without shifting unpredictably for projects which are already underway.

The Four Enablers

Enabler 1: Land Use, Location and Local Impact

The Victorian Government expects data centres to be built away from sensitive uses, such as homes, schools and childcare centres, and is committed to prohibiting new developments in the Green Wedge Zone. Investment should be directed towards locations with robust access to power, water and telecommunications capacity. The Action Plan recognises that certain critical infrastructure, such as hospitals and universities, often require nearby data centres. The Victorian Government is committed to working alongside industry to allow appropriate exceptions.

A new land use definition for data centres will be introduced into Victorian planning schemes, which reads: 

“Land used to collect, distribute, process, or store digital data. It does not include collecting, distributing, processing, or storing digital data if it is ancillary to another use of the land.”

Key locational controls include a 150 meter buffer between residential buildings and new data centre developments, a prohibition on data centres on residentially zoned land and a prohibition in rural zones unless located next to critical infrastructure to support the development. These locational controls will be supported by a statewide planning policy which will guide location, design, scale and infrastructure requirements. Detailed siting, design and built-form guidance is expected to be developed in 2027 following stakeholder engagement. 

Before construction work begins on public road verges, footpaths or traffic lanes, developers must satisfy mandatory state safety requirements. Referral status will be extended to WorkSafe Victoria, Fire Rescue Victoria, VicGrid and the relevant water corporation for all data centre applications. Applicants must comply with a statewide nighttime noise limit of 55 A-weighted decibels, with a penalty imposed for the tonal hum characteristic of cooling equipment. Where several premises affect a location, their noise impacts are assessed cumulatively. To protect local air quality and human health, proponents must restrict back up diesel generation to emergencies and testing, deploy best-available emissions technology and engage proactively with local communities. 

Additional consultation measures are planned for data centres, notwithstanding that existing notice requirements under the EPA’s development licence application process will continue to apply. Proponents will be required to notify immediate neighbours, publish detailed application documentation online and erect prominent signage on the proposed site. 

Enabler 2: New Energy Supply and Grid Readiness

Data centre electricity demand is expected to be met by new investment in renewable energy, without increasing network costs or compromising reliability for other energy users. Proponents will be required to offset operational electricity use by investing in new renewable generation and storage, cover all connection costs, participate in demand flexibility services to the maximum extent commercially and technically possible, and achieve high levels of power-usage effectiveness. These requirements are expected to contribute positively to Victoria's legislated emissions reduction and renewable energy targets. 

Enabler 3: Protecting Drinking Water and Securing Supply

Data centres using water for cooling are expected to use recycled or non-potable water. Where this is not possible, developers are expected to pay to replace the drinking water they use. For facilities relying on drinking water as an interim measure, a plan must be designed to reduce consumption during water restrictions. Facilities using water intensive cooling, such as evaporative or open-loop systems, are expected to use recycled or non-potable water or, where this is not feasible, to hold an agreement with their water corporation to transition to those sources when available. Proponents are also expected to meet the full cost of constructing and operating necessary water infrastructure.

The Victorian Government highlights the state’s recycled water capacity as a point of difference, noting that Victoria produces the largest volume of Class A recycled water in Australia. To support proponents, the Victorian Government will provide clear water strategy guidance for industrial consumers and prepare standardised data centre-specific templates for water corporations to inform approval decisions. 

Enabler 4: Victorian Jobs, Skills and Local Benefits

Given the scale of investment involved, the Action Plan expects the sector to maximise opportunities to support Victorian jobs and training across construction, specialised operational roles and the broader supply chain. Proponents are expected to contribute in the following four ways:

• Support the training of construction and operational workers through apprenticeships, partnerships or scholarships connected with real employment.
• Prioritise Victorian local suppliers and content.
• Coordinate with industry, unions and government to ensure skills development keeps pace with demand and delivers benefits across the economy.
• Hire individuals and training providers in the region where the project is located.

Victoria’s existing skills base and AU$8.1 million Digital Jobs – AI Career Conversion program provide a foundation for these workforce expectations, supporting workers moving into digital technology compatible roles. 

Alignment with the National Framework

The Action Plan is designed to align with the Australian Government’s expectations of data centres and AI infrastructure developers and the August 2026 Australian National Cabinet agreement that large data centres require consistent, mandatory national standards for energy, water and land use. With Commonwealth legislation anticipated in early 2027, the Victorian approach is positioned to work alongside the national framework as it develops, rather than as a standalone state regime. The Victorian Government will continue developing guidance with stakeholder input and engage with the Commonwealth as it develops further legislation.

Minister for Planning's Statement of Expectations

On 5 October 2026, Victoria’s Minister for Planning released a statement of expectations (Statement), supporting and supplementing the Action Plan. The Statement sets out the matters that proponents, decision makers and referral authorities are expected to consider when determining data centre permit applications lodged on or after 23 September 2026. It elaborates on certain requirements of the Action Plan by providing quantifiable limits and conditions for development. The Statement is expected to provide greater certainty in the interim period before the Commonwealth legislation is released. 

What This Means for Proponents

The Victorian Government has made clear that compliance with the Action Plan’s enablers and requirements is vital for the assessment of data centres going forward. Proponents should treat the Action Plan as a practical checklist to be worked through from the earliest stages of site selection and project design, focusing on locational controls, energy and water offset obligations and community engagement. 

A number of elements remain to be settled, including the forthcoming guidance on site location, design and built form, which is expected to be published in 2027. Proponents should monitor these developments as they may have implications for energy and water infrastructure arrangements and will likely develop in response to the foreshadowed national standards for data centres. 

K&L Gates’ planning and environment team is following developments under the Action Plan closely and is available to assist proponents with planning strategy and structuring of agreements to meet the Action Plan’s requirements.

The authors would like to thank graduate Juliette Petro for her contributions to this legal insight.

The Senate committee recommended the Bill be passed without amendment.

If enacted, the Bill will insert a new Part 10.10 into the Criminal Code Act 1995 (Cth) (Criminal Code). It will create seven offences targeting match-fixing, sports corruption and the misuse of inside information. The Bill is intended to remedy gaps and inconsistencies in existing state and territory laws and address cross-border enforcement issues. The Bill will supplement rather than replace the existing legislative regime, and Sport Integrity Australia has confirmed that state and territory law enforcement will retain primacy for their respective jurisdictions. 

History 

Australia has been working towards a nationally consistent match-fixing regime for more than a decade. In 2011, the Commonwealth, state and territory governments adopted the National Policy on Match-Fixing in Sport and committed to pursuing a consistent approach to criminal offences. In 2018, the Wood Review recommended national match-fixing legislation and that Australia become a party to the Council of Europe Convention on the Manipulation of Sports Competitions (Macolin Convention). 

The Macolin Convention is a multilateral treaty designed to prevent, detect and sanction the manipulation of sporting competitions, whether the conduct occurs domestically or across borders.

The Australian government signed the Macolin Convention in 2019 and committed to establishing Commonwealth match-fixing offences, but the proposed legislation did not eventuate. Seven years later, the Bill represents an important step towards strengthening Australia’s response to match-fixing and aligning it with international efforts to protect sports integrity.  

What Does the Bill Do?

The Bill will insert a new Part 10.10 into the Criminal Code and create seven offences intended to implement key criminal-law obligations under the Macolin Convention:

1. Corrupting a sporting event;
2. Inducing the corruption of a sporting event;
3. Soliciting corruption of a sporting event;
4. Altering, destroying or concealing corrupt conduct information;
5. Using or communicating corrupt conduct information;
6. Possessing corrupt conduct information with intent to use or communicate it; and
7. Using or communicating inside information.

Key Features

The offences apply broadly across sport, including esports.

They are not confined to betting-related match-fixing. Conduct intended to improperly influence a sporting outcome may be criminal even where no gambling is involved.

The offences will operate nationally. The Bill also contains provisions extending their international reach, some of which will commence only when the Macolin Convention enters into force for Australia, reflecting the reality that match-fixing can involve overseas participants and organised crime groups.

The prosecution need not prove that the sporting outcome was ultimately altered or that the intended benefit or detriment materialised, although each physical and fault element of the relevant offence must still be established.

Constitutional Basis 

Because the Commonwealth does not have a general power to legislate about sport or criminal law, each match-fixing offence must be connected to a head of legislative power in the Constitution. The Bill therefore includes "constitutional application provisions" which act as jurisdictional gateways. 

For match-fixing offences, the Commonwealth can legislate where the conduct or sporting event has a connection to:

• Corporations power: for example, where a sporting league or governing body is a corporation; 
• Trade and commerce power: where the activity relates to interstate or international commerce; 
• Communications power: where phones, text messages, email, social media or other communications services are used; 
• Territories power: where conduct or events occur in a territory; and 
• Nationhood power: where Australia is represented as a nation in the sporting event.

The Senate committee noted that, once Australia ratifies the Macolin Convention, the offences will also be supported by the external affairs power, because the legislation implements Australia's treaty obligations.

Penalties

The maximum penalty depends on the offence and ranges from three to 10 years’ imprisonment. The most serious offences—including corrupting a sporting event; inducing or soliciting that corruption, and altering, destroying or concealing corrupt conduct information—carry a maximum term of 10 years. This relates to: 

• Individuals: imprisonment, a fine, or both may be imposed, subject to the maximum for the relevant offence; and
• Corporations: financial penalties apply instead of imprisonment and may be calculated by reference to annual turnover under the general Commonwealth penalty regime. 

The information-related offences carry lower maximum terms, including three years’ imprisonment for possessing corrupt conduct information with intent to use or communicate it and for using or communicating inside information.

Comment

The breadth of some of the Bill’s definitions is likely to attract debate. The Bill provides that conduct “corrupts” a sporting event if it:

• Affects, or is likely to affect, the outcome of the sporting event, including any related review or appeal; and
• Is contrary to the standards of integrity that a reasonable person would expect of someone in a position to affect that outcome.

This is a broad definition and is consistent with the concept of sports manipulation in Article 3 of the Macolin Convention. It extends beyond the laws in New South Wales, Victoria, South Australia, the Northern Territory and the Australian Capital Territory, which generally require an intentional connection between the manipulation and betting. Queensland does not require a betting connection, but its offence is limited to conduct intended to obtain a financial benefit or cause financial harm and is therefore still narrower than the Bill.

The broader definition may create uncertainty at the boundary between legitimate sporting strategy and criminal manipulation. The Bill's Explanatory Memorandum seeks to address this concern. It states that strategic decisions—such as resting players before finals or deliberately losing to improve draft position—are not intended to be caught. The offences also require proof of an intention to obtain a benefit, avoid a detriment or cause a detriment, which provides a further safeguard.

There are, however, sound reasons for adopting a broader approach. Match manipulation can extend beyond professional and semi-professional competitions into community and junior sport, where there may be no regulated Australian betting market. An offence tied to betting would leave parts of the sporting landscape outside the reach of criminal sanctions. The Bill instead targets the manipulation of sporting competitions themselves, whether or not wagering is involved. By focusing on the corrupt conduct, it may also reduce the need for investigators to trace betting profits through offshore arrangements and foreign accounts. This should make it easier to investigate and prosecute match-fixing, particularly where organised crime groups operate across borders.

Conclusion 

Match-fixing is increasingly transnational and sophisticated. It can involve organised crime groups, offshore betting markets, international athletes and cross-border financial flows. Australia’s domestic criminal laws cannot, by themselves, address all of those dimensions. The Bill is an important step towards closing gaps in the current framework and supporting Australia’s proposed ratification and implementation of the Macolin Convention.

The new laws contemplated by the Bill have the potential to impact a wide range of sporting organisations and their partners, all of whom should carefully review their integrity policies now before the Bill becomes law.   
 

BACKGROUND

In January 2021, MACH Energy sought development consent to extend the operational life of the Mount Pleasant coal mine located in the Hunter Valley for a period of 22 years, enabling the extraction of an additional 406 million tonnes of coal. The development constituted state significant development in accordance with section 4.36 of the Environmental Planning & Assessment Act 1979 (NSW) (EPA Act). On 6 September 2022, the Planning Commission approved the application subject to conditions. The development application was the subject of significant objection, including by the Denman Aberdeen Muswellbrook Scone Healthy Environment Group (Healthy Environment Group). The Healthy Environment Group challenged the consent in the Land and Environment Court of NSW, arguing that the Planning Commission had misapplied the EPA Act. The primary judge dismissed the challenge, but the Court of Appeal allowed it on appeal, declaring the consent “invalid for failure to consider a mandatory consideration”. The matter before the High Court was an appeal brought by MACH Energy to challenge the conclusions of the Court of Appeal.

HIGH COURT OF AUSTRALIA

The majority of the High Court, Gordon J, Edelman and Beech-Jones JJ, each independently concluded that the Planning Commission failed to consider imposing conditions to minimise Scope 3 emissions to the greatest extent practicable, as required by clause 2.20(1)(c) of the State Environmental Planning Policy (Resources and Energy) 2021 (NSW) (Resources SEPP), and that the appeal should be dismissed, upholding the invalidity of the development consent. Gageler CJ and Jagot, in a joint judgment, dissented and supported the allowance of the appeal. 

Three issues were central to MACH Energy’s appeal:

1. Whether the Court of Appeal misconstrued section 4.15(1)(b) of the EPA Act as requiring the Planning Commission to consider the likely impacts of the development in the locality;
2. Whether the Court of Appeal was correct to find that the Planning Commission took into consideration clause 2.20(1)(c) of the Resources SEPP, as required by section 4.15(1)(a)(i) of the EPA Act; and
3. Whether climate change is capable of being construed as an environmental impact in the locality of the development for the purposes of section 4.15(1)(b) of the EPA Act, a question which, by reason of the first issue, did not ultimately need to be determined. 

Issue 1: Consideration of “In the Locality”

Gordon J, with Edelman and Beech-Jones JJ in agreement, held that the Court of Appeal had incorrectly treated the words “in the locality”, appearing at the end of section 4.15(1)(b) of the EPA Act, as applying to the whole paragraph. Properly construed, the provision requires a two-stage analysis; the consent authority must first identify the “likely impacts” of the development and must then “take into consideration” those likely impacts. The phrase “likely impacts of [the] development” contains no geographic limit and the examples following the first comma are nonexhaustive. In noting the practical concerns of the legislation, Gordon J held that a construction of section 4.15(1)(b) requiring the consent authority to identify and expressly consider every possible impact of a development, at the level of specificity advocated for by the Healthy Environment Group, would be administratively unworkable. The fact that there was evidence before the Planning Commission about the impact of greenhouse gas emissions and climate change on the local area did not ultimately transform this into a separate mandatory consideration.

Issue 2: Consideration of Scope 3 Greenhouse Gas Emissions

The second issue concerned the proper construction of section 4.15(1)(a) of the EPA Act, and whether, as that section directs, the Planning Commission took into consideration clause 2.20(1)(c) of the Resources SEPP. By majority, the Court held that the Planning Commission’s approval was invalid because it was required to consider whether to impose conditions to minimise all greenhouse gas emissions, including Scope 3 emissions, to the greatest extent practicable, but fell short in considering Scope 3 emissions. The majority observed that the language of clause 2.20(1)(c) of the Resources SEPP recognises that the imposition of conditions to ensure greenhouse gas emissions are minimised to the greatest extent practicable will not always be possible or desirable. However, this does not change the fact that the Planning Commission must still consider imposing such conditions in order to comply with its obligations.

The Planning Commission’s approach in this case was contrasted with its earlier consideration of the Narrabri Gas Project in Mullaley Gas and Pipeline Accord Inc v Santos NSW (Eastern) Pty Ltd (2021) 252 LGERA 221, where the Planning Commission expressly considered imposing conditions to minimise Scope 3 emissions, even though it ultimately decided not to impose them. 

Going forward, there will be greater pressure on development proponents to propose conditions addressing Scope 1, 2 and 3 greenhouse gas emissions in their environmental impact statements, as required under the EPA Regulations, but this does not relieve the Planning Commission from its own obligation to consider imposing such conditions. 

WHAT THIS MEANS GOING FORWARD

For the Mount Pleasant coal mine, the High Court’s decision means the matter will be remitted to the Land and Environment Court of NSW, which will reconsider the validity of the development consent. More broadly, the judgment will likely see more stringent consideration of GHG emissions and the resulting climate change impacts of proposed resource and energy development projects. For Scope 3 emissions, which for Australian-produced coal generally arise overseas, consent authorities will be required to turn their minds to whether conditions need to be imposed to minimise those emissions and whether doing so is practical and workable. 

Please contact a member of our planning and environment team to discuss how this decision may affect current or proposed resource development projects, particularly where Scope 3 emissions form a material part of the project’s likely impact. 

The authors would like to thank graduate Juliette Petro for her contributions to this legal insight.

Snapshot

• In addition to considering if they have any ‘relevant interest’, market participants also need to determine whether they have a new ‘deemed economic interest’ via the following categories:
  • Physically settleable derivatives (deeming the ultimate recipient of shares on settlement to already hold them); and
  • Non-physically settleable/cash-settled derivatives (deeming holders of the economic benefit of price movement to hold the position).
• Enhanced obligations are swept in from day one, so market participants only have a short amount of time left to ensure they are ready to comply with the new regime starting on 4 December 2026.

Background

Prior to the commencement of the Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025 (Treasury Laws Amendment), Chapter 6C of the Corporations Act 2001 (Cth) (Corporations Act) targeted the concepts of legal or voting interests to determine if substantial holding disclosures were required. 

The new regime will treat a person as holding securities, due to a derivative position giving them an economic exposure to the securities, including an offsetting short position, with the practical effect being that far more people become visible to the market than before.

Importantly, the core mechanics of substantial holding disclosure are unchanged: the 5% threshold, the 1% movement trigger and the cessation obligation all remain in place. What has changed is the range of interests counted towards those thresholds.

Australian Securities & Investments Commission (ASIC) has now registered the ASIC Corporations (Listed Entities Enhanced Beneficial Ownership) Instrument 2026/482 (Instrument 2026/482). Instrument 2026/482 sets out the technical rules necessary to implement the new enhanced beneficial ownership and substantial holding disclosure regime pursuant to the Treasury Laws Amendment. Among other things, Instrument 2026/482 prescribes how to calculate the number of issued securities in which a person has a ‘deemed economic interest’ arising from non-physically settleable derivative-based interests, as well as how ‘offsetting short positions’ are to be treated.

ASIC has also published:

• An updated Regulatory Guide 5 Relevant interests and deemed economic interests (RG 5);
• Regulatory Guide 9 Takeover Bids (RG 9); and
• Regulatory Guide 222 Substantial holding disclosure and tracing requirements (RG 222).

It has also made further consequential amendments to the following regulatory guides: 

• Regulatory Guide 6 Takeovers: Exceptions to the general prohibition (RG 6);
• Regulatory Guide 10 Compulsory acquisitions and buyouts (RG 10);
• Regulatory Guide 74 Acquisitions approved by members (RG 74);
• Regulatory Guide 128 Collective action by investors (RG 128); and
• Regulatory Guide 193 Notification of directors’ interests in securities: Listed companies (RG 193).

Material Changes to the Rules

Determining a Substantial Holding Position 

In addition to the previous considerations relating to presence of a ‘relevant interest’, there are now two new mechanisms to consider to determine if a 'deemed economic interest' exists: 

• Physically settleable derivatives (deeming the ultimate recipient of shares on settlement to already hold them); and 
• Non-physically settleable/cash-settled derivatives (deeming holders of the economic benefit of price movement to hold the position).

Short positions can offset, but do not, on their own, trigger disclosure. A pure short position, without any accompanying long-side interest, does not create a substantial holding. It is only used to net down an existing deemed economic interest. 

Substantial holding thresholds are therefore no longer assessed on relevant interests alone. Market participants need to determine their 'derivative-based holding percentage', which is made up of a person's relatable, deemed physically settleable, and deemed non-physically settleable derivative-based holding percentages. 

This derivative-based figure is then considered together with the person's existing relevant-interest-based holding percentage to determine whether the 5% substantial holding threshold is crossed. 

Separately, where the person has an 'offsetting short position', a corresponding offsetting short position percentage must also be calculated and disclosed. 

Index and Basket Exposure Gets Relief 

Exposure through a basket or index generally falls outside the rules where it is below 5% of a class and that class is less than 30% of the basket by value, or where the index is run by a recognised provider under a public methodology. These carve-outs switch off during a live bid or scheme if the person is the bidder.

Exclusions for Market-Makers, Client-Services and Clearing Facilities

Genuine market-making, client-facilitation and hedging activity can be excluded from the deemed economic interest rules within defined limits, but licensees must still notify the market once their 'would-be' holding (other than the exclusion) reaches 20% or moves by one percentage point above that level.

ASX Companies 

Listed companies themselves take on new duties as the 'key person' for their Chapter 6C body. Once a company receives relevant interest information under Chapter 6C, it must maintain a register of that information.

The register must record the nature, extent and circumstances of each relevant interest, the holder's identity, and details of anyone who has given instructions about the securities, with new information entered within two business days of receipt. 

The register must also now be kept in electronic form, with prescribed data fields for each disclosure (a disclosure identifier, disclosure date, member identifier, class and number of disclosable securities, and a locating reference), and copies must be given in the same electronic format. 

The register must be open for inspection by members, academics and journalists without charge, and by any other person on payment of a fee if the key person requires one.
The reforms also touch related regimes. Listed company directors' obligations to notify the market operator of their relevant interests under section 205G of the Corporations Act now extend to deemed economic interests as well. 

What Is Next?

No Grandfathering for Existing Positions

A person's most recent substantial holding notice lodged before 4 December 2026 becomes the baseline for measuring future 1%-or-more movements under the new rules. Anyone holding a derivative that gives rise to a deemed economic interest before that date is treated as beginning to hold that interest on 4 December.

New Forms, Six-Month Transition

ASIC has prepared a new consolidated 'Substantial Notice Form' which combines the previous initial, change and ceasing to become a substantial holder forms. 

From 4 December 2026 to 3 June 2027, market participants may lodge the new consolidated form or transitional Forms 603, 604 and 605 to meet their obligations under the law. The new consolidated 'Substantial Notice Form' becomes mandatory on and from 4 June 2027.

The Upshot

All market participants now have a short runway left to ensure they are ready to comply with the new regime starting on 4 December 2026. Market participants should, prior to this date, reconcile their position data, establish full-notional calculation methodologies, and consider and document exemption decisions. 

Further:

• Bidders and strategic investors should map their (and their associates') physical holdings, derivative exposure and short positions prior to 4 December 2026 before building a stake or entering new derivative transactions.
• Banks, prime brokers and derivative writers should consider and implement strategies to allow them to track positions in aggregate across desks, and confirm which arrangements are excluded from the regime fall within an exclusion, so that they are ready for disclosure (if required).
• Listed entities should prepare relevant interest registers and establish a tracing notice process.
   

The Guidelines serve a dual function in assisting data centre proponents to put forward compliant development proposals that satisfy assessment expectations, subsequently improving approval timeframes and strengthening public confidence that the state’s energy and water resources will be used efficiently, while risks to reliability and security are managed. A central theme put forward by the state government is the importance of appropriate site selection and early engagement with DPHI during the initial design phase. This reflects feedback that data centres generally present fewer planning and infrastructure complexities when located on brownfield sites with existing energy and water capacity, away from sensitive and densely populated areas.

The Guidelines build on the NSW government’s Data Centre Consultation Paper released in March 2026, following a six-week stakeholder consultation period. It sets out six principles, supported by 17 specific performance measures which data centre proposals will be assessed against, together with a package of commitments intended to speed up planning outcomes for compliant projects. 

Why the Guidelines Matter 

The government has acknowledged that current energy, water and planning regulatory frameworks are not fit for purpose to manage the impacts of rapid data centre growth or to provide certainty to the sector. The Guidelines are the government’s interim response while broader regulatory reform is pursued. This issue is becoming more acute as the Australian Energy Market Operator forecasts that data centre consumption of grid-supplied energy will more than double by 2030, at the same time as roughly 7 gigawatts of coal-fired generation is scheduled to retire. Regulatory change is already contemplated for both the energy and water sectors to address cost recovery for energy and water infrastructure. Proponents and their advisers will need to consider how conditions imposed by the Guidelines interact with the existing statutory scheme, including how transitional arrangements will operate as the framework moves from guidance to more settled regulatory instruments.

Faster Pathways for Compliant Projects 

For projects that demonstrate compliance with the Guidelines and principles, DPHI is committing to a suite of process improvements, including the following:

• A dedicated concierge function within the DPHI, working with the planning assessment team, to provide proactive updates and troubleshooting throughout the assessment process.
• Pre-assessment support which begins before a site has been selected. This service is set to advise on site selection, note key issues to address, provide suggested amendments and identify stakeholders to engage with before a request for the Secretary’s Environmental Assessment Requirements (SEARs) is made.
• A commitment to issue SEARs within two months, which are tailored to the specific project rather than a generic checklist.
• A commitment that development application assessment will take no longer than 75 days in state government hands.
• Dedicated post-consent staff within DPHI’s assessment team for data centres.

Applicants will be expected to demonstrate compliance with the Guidelines as part of their assessment, with resulting obligations, mitigation measures and commitments outlined in their Environmental Impact Statements embedded as consent conditions and monitored through the DPHI’s existing compliance framework.

The Six Principles and Key Performance Measures

The Guidelines are structured around six principles, each with associated performance measures. The principles are intended to work together and broadly cover efficient resource use, cost stability for consumers, funding of additional supply, community benefit, industry development and workforce investment.

Principle 1: World-Class Environmental and Efficiency Standards

This is the most technically detailed principle and includes efficiency and environmental design targets that proponents will need to plan around from an early stage, including the following:

• Design targets for power usage effectiveness and water usage effectiveness to promote the efficient use of resources.
• A requirement that data centres using water-intensive (or open-loop) cooling systems use recycled water for 100% of cooling operations or have an agreed transition pathway with their water utility for the transition to rainfall-independent water, to ensure agricultural and household water use is not adversely affected.
• Facility design which accounts for drought-related water restrictions, such as hybrid cooling systems that can operate on minimal water.
• Compliance with the “Group 6” air pollutant limits under the Protection of the Environment Operations (Clean Air) Regulation 2022 for diesel backup generators, with a lower-stringency US Environmental Protection Agency “Tier 2” pathway available for facilities located outside of metropolitan cities, regional towns and sensitive receivers.
• Quantitative noise and vibration impact assessments prepared by suitably qualified acoustic consultants.
• Fire and explosion risk management addressing diesel fuel storage, lithium-ion battery and complex electrical work risks, in line with guidance from Fire and Rescue NSW and SafeWork NSW.
• Provision of maximum and average water and energy demand forecasts, as well as installation of smart energy and water meters, to support the provision of data for infrastructure planning.

Principle 2: Impose No Net Cost to Consumers and Communities

This principle addresses the risk that data centre demand drives up network costs that are ultimately borne by ordinary consumers. Performance measures require proponents to demonstrate an ability to reduce grid-supplied electricity demand by 25% of the data centre forecasted average load, for up to two hours, thus reducing demand during peak periods and preventing electricity price increases. There will be a focus on load shifting and on-site/proximate renewable generation and battery storage. This performance measure cannot be met using diesel backup generators. There is an expectation on proponents to secure commercial arrangements with energy and water utilities, such as take or pay arrangements, prepayments or upfront capital contributions, that protect the broader customer base from stranded asset risk. Notably, data centres located outside the Sydney Ring and closer to renewable energy zones are expected to face smaller contribution obligations given the greater existing grid capacity. The second principle considers issues experienced in other jurisdictions during the emergence of data centre development and seeks to address these issues in the early stages of development for NSW. 

Principle 3: Fund Additional Supply of Water and Energy

Proponents are expected to enter into power purchase agreements and firming arrangements for additional renewable generation to meet their electricity demand, including a minimum 40% wind generation component, storage capacity of at least 25% of generation capacity over a four-hour duration and agreements of at least 10 years’ duration. Where recycled water is unavailable, proponents must negotiate a plan with their water utility to fully offset interim potable water use.

Principle 4: Enhance Local Community Infrastructure and Amenity

Proponents are encouraged, though not required as part of the development application itself, to engage in benefit sharing with local communities, informed by the principles applied in the renewable energy sector, where benefit sharing is standard practice, collaborative, transparent, community focused, proportionate and delivers lasting positive outcomes. Meaningful community consultation and ongoing council engagement remain as requirements embedded in the SEARs for SSD projects.

Principle 5: Invest in Future Industries Across the Supply Chain

The Guidelines encourage proponents to prioritise the use of local content and engage with the NSW government on opportunities to support local supply chains, particularly given the state’s projected growth in its technology workforce from more than 340,000 current workers to approximately 500,000 by 2030.

Principle 6: Demonstrate a Commitment to Training and Skills to Support Jobs

Proponents are expected to demonstrate support for training and skills development of workers involved in the construction and operation of their facilities, including apprenticeships, partnerships with recognised training providers such as Technical and Further Education (TAFE) NSW, and scholarship programs connected to employment.

Looking to Other Jurisdictions 

A notable feature of the Guidelines is the extent to which each performance measure is benchmarked against comparable frameworks overseas and interstate, including directives and regimes from the European Union, Singapore, the United States of America and Victorian state-level guidelines. This positions the NSW approach with international best practices, while adapting settings to the state’s specific resource conditions.

What This Means for Proponents 

The DPHI has made clear that compliance with the Guidelines will influence the efficiency of the assessment process. Proponents should treat the Guidelines as a practical checklist to be worked through from the earliest stages of project design, well before a development application is lodged. 

The NSW government has flagged that it will establish an Industry Advisory Forum to review the Guidelines annually and has signalled further reform activity, including a review of the Protection of the Environment Operations Act 1997 framework, updates to water and energy cost recovery frameworks and refinement of environmental performance standards to ensure the regulations are fit for purpose for data centre developments. Proponents with projects in the pipeline should monitor these developments closely, as they may affect both the applicable performance measures and the underlying arrangements for energy and water infrastructure.

K&L Gates’ planning and environment team is following developments under the Guidelines closely and is available to assist proponents with site selection, planning strategy and structuring of resource agreements to meet the Guidelines’ performance measures.
 

The authors would like to thank graduate Juliette Petro for her contributions to this legal insight.

The Bill makes targeted, practical refinements to Australia’s mandatory merger control regime, which has been in effect since 1 January 2026.

IN BRIEF

The Bill amends the Competition and Consumer Act 2010 (Cth) (CCA) to address three key areas of the regime which have caused the most practical difficulty for businesses and their advisers since its introduction:

• The concepts of “control” and “associates” have been amended to prevent the over-capture of acquisitions that do not confer competitively significant influence over a target. 
• In particular, ordinary commercial arrangements, such as simply being party to shareholder agreements, will no longer automatically result in otherwise unconnected parties being treated as jointly controlling a target. 
• Acquisitions which were required to be notified to the Australian Competition and Consumer Commission (ACCC) under the CCA, but which are put into effect or completed without notification (Non-Notified Acquisitions), are no longer automatically void. Instead, the ACCC must apply to the Federal Court (the Court) for an order voiding the acquisition.
• Parties who are unable to complete an approved acquisition within 12 months of the ACCC’s determination may now apply to the ACCC for an extension, rather than being required to re-notify the transaction. The ACCC may grant an extension for up to six months and may do so more than once where appropriate.

IN MORE DETAIL

Australia’s mandatory merger control regime has, since its introduction on 1 January 2026, led businesses and their advisers to adopt a cautious approach to notification, given the significant consequences of an incorrect assessment. 

Schedule 4 to the Bill seeks to address this issue by refining three key aspects of the regime: the scope of the concepts of “control” and “associates” (which has implications for the scope of the control exemption under s 51ABS of the CCA), the consequences of a failure to notify, and completion timelines for approved mergers where there are reasonable delays. 

Significantly, the Bill preserves the ACCC’s status as a first-instance decision maker and is not intended to give merger parties scope to bypass the notification process. Rather, the amendments are intended to reduce the compliance burden and risk associated with the regime for acquisitions that are unlikely to result in any degree of competitively significant influence. 

The practical implications of each of these changes are considered below.

Clarifying “Control” and “Associates”

Section 51ABS of the CCA provides that an acquisition of shares in a body corporate generally does not require notification if it does not result in the acquirer obtaining control of the target (subject to certain voting power thresholds that may still trigger notification). 

Prior to the changes effected by the Bill, a person is treated as controlling a target if that person, together with one or more “associates” – as defined in Chapter 6 of the Corporations Act 2001 (Cth) (Corporations Act) – jointly has the capacity to determine the target’s financial and operating policies. 

The definition of “associates” under the Corporations Act includes circumstances where two persons have entered, or propose to enter, into a “relevant agreement for the purpose of controlling or influencing the composition of [a] designated body’s board or the conduct of the designated body’s affairs.” 

This definition of “associates” is broad, and on a natural reading, treats parties as associates merely because they are party to the same shareholders’ agreement. This could have the result that an investor who acquires an interest in a target may be treated as obtaining joint control of that target, even if their acquisition does not confer any practical influence over the target. 

Given the very severe consequences of failing to notify the ACCC of an acquisition that is required to be notified, this drafting led many businesses and advisers to adopt highly cautious approaches to their notification obligations – and resulted in notifications of many acquisitions even where the acquirer did not obtain a competitively significant degree of influence over the target.  

The Bill and the new position have rectified this issue by introducing a new s 51ABSA that narrows the definition of “associate” and increases the threshold for what amounts to “control”.

These amendments focus on the acquirer’s practical influence, including whether the acquirer and one or more (more narrowly defined) associates can jointly determine decisions about the body corporate’s financial and operating policies.

Narrowed Definition of “Associates”

The Bill narrows the definition of “associates” such that two persons will only be considered associates in relation to a body corporate if one or more of the following apply: 

• The two persons are connected entities (i.e. part of the same corporate group); 
• The two persons have entered, or propose to enter into, a relevant agreement for the purpose of controlling or influencing the outcome of decisions about the designated body corporate’s financial and operating policies; or
• The two persons are acting, or propose to act, in concert in relation to controlling or influencing the outcome of decisions about the designated body’s financial and operating policies. 

The Bill also exempts certain common commercial arrangements from, on their own, causing parties to be treated as associates. These include minority shareholder protection rights, arm’s-length financing arrangements and standard shareholder agreements about governance processes, dividend policy agreements, and rights to dispose of securities.

Consequential Increase in Threshold for “Control”

The effect of these amendments is that joint control will only arise where the acquirer is an associate of another entity under the narrowed definition, and the acquirer and that associate jointly have the capacity – in a real and practical sense – to determine the outcome of decisions about the target’s financial and operating policies. 

The “associates” and “control” amendments introduced by the Bill should have the effect of reducing the number of ordinary commercial arrangements that inadvertently give rise to a notification obligation. 

A Failure to Notify No Longer Automatically Voids an Acquisition 

Under the current provisions, acquisitions which are required to be notified must not complete unless they have first received a determination from the ACCC that the acquisition may be put into effect (or the ACCC has granted a notification waiver in respect of that acquisition). 

Non-Notified Acquisitions are currently automatically deemed void. The severity of this outcome has led businesses and legal practitioners to take a conservative approach when assessing whether a proposed transaction is notifiable.

The Bill or the new position amends the CCA such that acquisitions which are required to be notified will only be automatically void in a much narrower range of circumstances, being: 

• Where an acquisition is put into effect prior to it being “finally considered” by the ACCC – that is, where the acquisition was notified to the ACCC, but the ACCC has not yet issued its determination or the determination is subject to a review; 
• Where the acquisition was notified, but the ACCC has issued a determination that it must not be put into effect (and the acquisition has not received favourable public benefit determination); and 
• Where the acquisition was notified to the ACCC, but the ACCC’s determination that the acquisition may be put into effect has since become “stale”.

In all other circumstances, Non-Notified Acquisitions will not be automatically void. 

Rather, the ACCC must apply to the Court for a declaration that the Non-Notified Acquisition “is, and is taken always to have been, void” (void ab initio).

The Court must grant this declaration, unless it considers that it would be undesirable to make such an order – for example, where the order would result in significant harm to innocent third parties, or where the vendor company has been wound up and no longer exists.

The Bill emphasises that, in deciding whether to make such an order, the Court must not consider competition effects. The explanatory statement to the Bill clarifies that this is intended to preserve the ACCC’s role as first-instance decision-maker on substantive competition assessments and maintains incentives to notify acquisitions under the existing thresholds and requirements.

The ACCC has a six-year limitation period to apply to the Court for an order that a Non-Notified Acquisition is void ab initio. 

Granting Extensions for “Stale” Notifications

If the ACCC makes a determination in relation to:

• A notification (that the notified acquisition may be put into effect or must not be put into effect); or
• A public benefit application (that the acquisition would be of public benefit, or not to make the determination applied for in the public benefit application),

the notification becomes “stale” 12 months after the date of the ACCC’s determination (the Relevant Period).

When a notification becomes “stale”, the notifying parties must submit a fresh notification to receive a renewed clearance from the ACCC. Acquisitions that are put into effect after the Relevant Period are deemed automatically void (both under the current regime and, as above, post the amendments introduced by the Bill). 

However, the Bill has introduced an administrative mechanism that allows parties to seek multiple extensions (of up to six months each) for the period in which the acquisition can be put into effect after approval. There is no limit to the number of extension requests that can be made. 

In deciding whether to grant an extension, the ACCC must have regard to the following factors:

• Whether there are reasonable reasons why the acquisition has not been put into effect;
• Whether there have been material changes to the market since the initial determination; and
• Whether another notification of the acquisition is more appropriate.

If an extension request is made, the ACCC must give written notice of its decision to grant or not grant the extension. If an extension is granted, conditions from the original approved notification will continue to apply. Once an extension is granted, details of this extension will be published on the ACCC’s acquisitions register within one business day of the decision.

Importantly, the explanatory statement notes that a decision by the ACCC to grant (or not grant) an extension is not subject to merits review, as it does not impact the substance of the notification that has already been approved.

WHEN THE PROVISIONS BEGIN TO APPLY

Schedule 4 to the Bill commences the day after it receives Royal Assent (Effective Date).

The changes outlined above in relation to the “associates” and “control” provisions, and the transition from automatically voiding Non-Notified Acquisitions to a Court-supervised voidable process, will apply to acquisitions which are put into effect from the Effective Date. 

The new extension mechanism for stale notifications will apply to any notification of an acquisition if, at the time of the Effective Date, no more than 12 months has elapsed since the ACCC made its notification or public benefits determination (i.e. it will apply to all notifications that are not already “stale” by the Effective Date).

WHERE TO FROM HERE?

The changes introduced by the Bill will no doubt assist in refining the application of the merger regime, along with the scope and number of acquisitions captured in due course. 

Businesses should, in light of these amendments, “take a step back” and re-focus their current approach to merger analysis to incorporate the new mechanisms, refined concepts and reconsider their timelines accordingly.

In addition to these changes, Treasury is undertaking consultations about “threshold-related changes” that may need to occur as part of the review that is to take place following the first 12 months of the laws’ operations.

If you have any queries about the new changes introduced by the Bill, please contact our competition and consumer law team or corporate team and we can provide you with additional details, or clarify your queries accordingly.
 

What Is Changing?

If implemented, the proposed reforms would provide offerors with greater scope to advertise or otherwise issue communications in relation to a proposed offer before lodging the relevant disclosure document.

This would potentially allow offerors to do the following:

a)    Engage with the market and create awareness before formally launching an offer.

b)    Address market commentary or reporting (if any).

c)    Better gauge interest in a proposed offer.

The Investor Protection Challenge

The existing pre-lodgement advertising regime, albeit limiting, serves important investor protection objectives. ASIC identifies these to include preventing the selective release or “drip-feeding” of information to the market, discouraging inadequate analysis of the disclosure document, and discouraging investment decisions being made on the basis of advertising or publicity rather than the disclosure document.

The proposed regime would bring the treatment of unquoted securities more closely into line with the existing pre-lodgement regime for quoted securities by allowing broader communications, provided prescribed statements are included. 

The proposed reforms do not, however, displace other requirements that apply to communications, including the existing prohibitions on misleading or deceptive conduct, and pre-lodgement communications should therefore be carefully considered before being issued.

What Should Offerors and Advisers Take From This?

The reform proposed by CP 390 represents a significant change to the practical operation of Australia's initial public offering (IPO) regime. If adopted, offerors contemplating an IPO would have greater flexibility to engage with the market before lodging their disclosure document.

If offerors are able to communicate more freely beforehand, there is a risk that particular statements or themes become the focus of investor attention, influencing investment decisions before investors have access to the disclosure document. There is also a risk of inconsistency between pre-lodgement communications and the subsequent disclosure document. A statement that appears reasonable when made may later need to be qualified, updated or omitted from the final prospectus, and this may create regulatory and reputational risks for the offeror and its advisers.

Accordingly, the greater flexibility would also require greater discipline around the preparation and approval of communications. Offerors and their advisers would need to carefully consider how statements made during the pre-lodgement period are supported, monitored and ultimately reflected in, or remain consistent with, the disclosure document.

The consultation period closes on 11 September 2026, with release of the legislative instrument and updated regulatory guidance expected on 30 October 2026.
 

This edition of the K&L Gates “Competition and Consumer Law Round-Up” provides a summary of recent and significant updates from the Australian Competition and Consumer Commission (ACCC), as well as other noteworthy developments in the competition and consumer law space. If you would like any additional details about the issues outlined in this newsletter or wish to discuss them further, please reach out to any member of the K&L Gates Competition and Consumer Law team.

Enforcement

• ACCC Commences Proceedings Against Grill’d for Alleged Greenwashing Claims
• JB Hi-Fi to Refund More Than AU$250,000 Following ACCC Investigation Into Misleading Pricing Practices
• ACCC Calls for a Stronger Horticulture Code as Fruitico and Fresh Express Pay Record Penalties for Alleged Breaches
• Dusk in Court Over Sale of Thousands of Allegedly Noncompliant Button Battery Products

Mergers and Acquisitions

• Acquisitions Register Update: FY2025/2026
• Peter Warren’s Acquisition of Wakeling Automotive Sites and Trescal’s Acquisition of TR Calibration Require Phase 2 Review by the ACCC
• ACCC Approves Ampol’s Acquisition of EG Australia, Subject to Conditions
• ACCC Opposes Coles’ Acquisition of a Supermarket and Liquor Site in Kalgoorlie
• ACCC Approves Heidelberg’s Acquisition of Maas’s Construction Materials Business Subject to Conditions

Notifications and Authorisations

• ACCC Grants Authorisation for Air Cargo Alliance
• ACCC Grants Interim Authorisation for Preparatory Steps to Establish Joint Venture for Commercial Cash Distribution
• ACCC Grants Exemptions From the Cash Acceptance Industry Codes to Petro National Pty Ltd and Ampol Australia Petroleum Pty Ltd

Noteworthy Developments

• Joint Statement: Regulators Strengthen Joint Oversight of Digital Platforms
• ACCC Issues Class Exemption for Global Supply Chain Disruptions
• ACCC Review Shows That Misleading and High-Pressure Unsolicited Sales Practices Are Widespread

Click here to view the Round-Up.

Why is This Important?

Automated bidding was flagged in the NEM wholesale market settings review chaired by Associate Professor Tim Nelson as a key risk and an area of future regulatory scrutiny, and the Compliance Bulletin confirms that scrutiny is increasing. While the AER acknowledges the operational benefits of automation, it expects Market Participants to maintain effective oversight, carry out robust due diligence of third-party providers and be able to demonstrate and explain automated bidding decisions if questioned.

What Are the Key Messages From the AER?

Greater Automation May Increase Compliance Risks

Market Participants remain responsible for ensuring all bids and rebids comply with the National Electricity Rules (NER), whether submitted manually, through internally developed software or via a third-party provider.

Systems that submit bids directly to the Australian Energy Market Operator without allowing the Market Participant to independently verify or adjust the bid present a higher compliance risk. Market Participants are expected to maintain appropriate oversight and control over automated bidding processes and implement suitable risk management measures.

Any noncompliance arising from automated bidding remains the responsibility of the relevant Market Participant.

Relevant obligations include the following:

• Rebid explanation requirements.
• Prohibitions on false or misleading bids and rebids.
• Obligations to ensure plant capability aligns with submitted bids. 

Competition Law Risks Must Also Be Considered

Bids submitted via third-party providers should be developed independently for each Market Participant, reflecting that participant’s technical parameters, portfolio constraints and commercial strategy. Participants and service providers should avoid arrangements that could facilitate cartel conduct, bid rigging or concerted practices under the Competition and Consumer Act 2010 (Cth).

Expectations When Using Third-Party Bidding Providers

The Compliance Bulletin sets out a due diligence framework for Market Participants engaging third-party bidding services, automated bidders or self-forecasting providers, recommending that they do the following:

• Undertake comprehensive due diligence on the provider and its systems.
• Understand how the service supports NER compliance.
• Ensure contractual arrangements support compliance obligations.
• Retain the ability to tailor software settings to site-specific circumstances.
• Confirm providers update systems in response to rule changes and AER guidance.
• Regularly monitor, audit and review the service.
• Maintain contingency plans for system failures, updates or technical issues.

Importantly, the AER reminds third-party bidding providers that they may face accessorial liability if their services contribute to a Market Participant’s breach of the National Electricity Law.

Contemporaneous Records for Automated Rebids

The Compliance Bulletin also gives guidance on record-keeping for automated rebids. Contemporaneous records should ideally include the following:

• The instructions or algorithms relied upon by the automated system.
• The triggering events or conditions that prompted the rebid.
• Relevant thresholds used by the system.
• Any standing instructions provided to third-party service providers.

Detailed system-generated logs may satisfy record-keeping requirements where they adequately record the following:

• Inputs used by the system.
• Decision logic applied.
• Outputs produced for each rebid decision. 

These suggestions are not yet mandatory, but the AER indicates they are likely to inform future amendments to the AER’s published Rebidding and Technical Parameters Guidelines.

What Are the Practical Implications for Generators and Integrated Resource Providers?

If you use optimisation platforms, bidding aggregators or third-party market services, the key takeaways are as follows:

1. Responsibility cannot be outsourced. Market Participants remain accountable for compliance, even where bidding decisions are fully or partly automated. 
2. Governance matters. Market Participants should have documented oversight procedures, approval frameworks and compliance controls around automated bidding systems. 
3. Contract reviews may be warranted. Review existing agreements with bidding service providers to ensure compliance obligations, audit rights and update obligations are appropriately allocated.
4. Record-keeping requirements are becoming more sophisticated. Assess whether your current software captures sufficient information to explain an automated rebid if requested by the AER. 
5. Competition law compliance should not be overlooked. Particularly where a service provider is acting for multiple participants in the market.

Background

Elecnor Australia Pty Ltd (Elecnor) and Clough Projects Australia Pty Ltd (Clough) were joint venture partners on Project EnergyConnect, a major electricity transmission infrastructure project for Transgrid. Following Clough’s insolvency in late 2022 and the subsequent implementation of a deed of company arrangement (DOCA), a dispute arose concerning the ownership of Clough’s interest in the joint venture.

In December 2024, Elecnor commenced proceedings in the Commercial List of the Supreme Court of New South Wales against Clough and the trustees of the DOCA. Elecnor sought declarations that the DOCA had not transferred Clough’s joint venture interest, the joint venture deed or the engineer, procure and construct contract to the trustees, together with orders requiring Clough to comply with the contractual compulsory acquisition process under the joint venture deed. 

Clough and the trustees defended the claim and alleged that Elecnor had breached its good faith and quasi-fiduciary obligations in connection with the proposed acquisition. Clough also filed a separate cross-claim seeking contribution following Transgrid’s earlier call on bank guarantees and insurance bonds procured at Clough’s request.

The joint venture deed contained an arbitration clause requiring disputes to be referred to arbitration in Singapore. Elecnor contended that Clough’s contribution cross-claim fell within that arbitration agreement and should therefore be stayed and referred to arbitration, even though Elecnor’s compulsory acquisition claim would remain before the court. Clough and the trustees, on the other hand, argued that the proceedings should not be split and sought to have Elecnor’s claim referred to arbitration if any part of the dispute was to be arbitrated.

The central question was whether, and to what extent, the proceedings comprised distinct “matters” that fell within the scope of the arbitration agreement.

Proceedings Can Be Split

The court confirmed that a single set of proceedings may involve more than one “matter” for the purposes of section 7(2) of the International Arbitration Act. As a result, only those matters that fall within the scope of the arbitration agreement, and are capable of settlement by arbitration, should be stayed and referred to arbitration.

This may create parallel proceedings. However, that is a consequence of the parties’ agreement and the mandatory operation of section 7(2). Convenience is not the test.

Parties and their advisers should consider and account for this when drafting dispute resolution clauses and commencing proceedings pursuant to them. Matters involving insolvency, multiple parties or overlapping contractual and statutory rights are particularly prone to fragmentation across forums.

Insolvency Disputes Have Limits

The court held that the primary judge did not err in concluding that the compulsory acquisition dispute was not arbitrable. Resolution of that dispute required construction of the DOCA and consideration of the part 5.3A regime under the Corporations Act 2001 (Cth) in a way that could affect the rights of third-party creditors and engage statutory rights beyond the parties themselves.

By contrast, Clough’s contribution claim—a dispute arising between the parties under the joint venture deed that could be determined without affecting third-party or statutory interests—was referred to arbitration.

The distinction is important. Parties should not assume that an arbitration clause will extend to every dispute that arises in, or is shaped by, an insolvency context. The question remains whether the particular matter is capable of settlement by arbitration, including having regard to whether its resolution may affect nonparties or the operation of a statutory regime.

Waiver Requires Unequivocal Conduct

The court also clarified when an arbitration agreement will be treated as inoperative. The threshold is high. A party must demonstrate clear and unequivocal conduct showing that the other party no longer intends to be bound by the arbitration agreement.

Elecnor sought a stay promptly after Clough’s cross-claim was filed. That conduct was consistent with an intention to arbitrate, not to abandon the arbitration agreement. The court confirmed that commencing court proceedings in respect of a nonarbitrable matter does not, without more, constitute waiver of the right to arbitrate a separate, arbitrable matter.

What This Means in Practice

Three key points follow from the decision.

First, arbitration agreements will be enforced even where only part of a dispute is arbitrable. Parties should plan for the possibility of parallel proceedings arising from the court’s task of identifying arbitrable “matters” at a granular level.

Second, disputes that require determination of statutory rights or may affect third-party creditors may fall outside the scope of arbitration, depending on their character. This is particularly relevant where contractual rights intersect with insolvency regimes or other statutory frameworks.

Third, parties who intend to rely on an arbitration agreement must act consistently and promptly. Delay or equivocal conduct may create an argument that the arbitration agreement has become inoperative.

The decision is an important reminder that arbitration clauses are not always all-encompassing. In complex commercial disputes, courts will enforce arbitration agreements according to their terms but with an eye to retaining jurisdiction of matters that are not capable of arbitral determination.
 

Tariffs cause tensions to rise between the world's major trading countries and often result in the exporting country's retaliation, as we have seen with China's retaliatory tariffs. The tariffs, tensions, fears of retaliation and trade wars do not boost economic growth. In fact, these factors cause many businesses to reduce their planned investments, which impact economies worldwide.² Further, the tariffs have caused global trade policy uncertainty to rise, forcing market participants to expect weaker economic outcomes.³ 

Consequently, the risks of a global economic slowdown, and possibly a recession, are growing. It is expected that the tariffs will result in a persistent decline in output growth, which will affect the gross domestic product (GDP) growth in Australia, especially considering that the United States and China, the two countries at the centre of the trade war, are two of Australia's largest trading partners.⁴ Additionally, in Australia, the inflationary pressures and higher borrowing costs add to economic uncertainties and further financial pressures on domestic businesses and households.⁵

Recent Updates—Aftermath of the US Supreme Court's Review

In February 2026, the US Supreme Court reviewed tariffs imposed under the International Emergency Economic Powers Act (IEEPA),⁶ including the “reciprocal” tariffs imposed on most US imports, including Australia.⁷

Upon its review of Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, Inc., the US Supreme Court upheld the lower courts' findings that the IEEPA does not give power to the US president to impose tariffs on imported goods.⁸

(For further information, read the updates by K&L Gates' Policy and Regulatory team in the US in 'Summary: Supreme Court Decision on IEEPA Tariffs' here and 'Unpacking the US Supreme Court's IEEPA Tariff Decision: The Outlook for Future Disputes' here.  You can also watch a K&L Gates webinar on the 'Impacts of the Recent US Supreme Court Decision on Trump's Emergency Tariffs' here.)

However, in place of the withdrawn “reciprocal” tariffs, the United States has imposed a global 10% “Temporary Import Surcharge” under section 122 of the Trade Act of 1974,⁹ which applies to most Australian imports to the United States and is set to expire on 24 July 2026.¹⁰  Currently, aircrafts, jet engines and their parts are exempt from the Temporary Import Surcharge as the United States continues its investigation under Section 232 of the Trade Expansion Act 1962¹¹ to assess the effect of imports on US national security.¹²

You may be wondering: what will be the replacement tariff after the expiry of the Temporary Import Surcharge?

On 3 June 2026, the United States proposed a new 12.5% tariff on Australian exports as part of its forced labour investigation under section 301 of the Trade Act of 1974.¹³  While the Australian Government has made several submissions challenging the proposed tariffs, the United States has not shown any signs of backing down, nor has it indicated when it would put the proposed tariff in place.¹⁴ This leaves Australia in a place of great uncertainty in relation to the future effects of tariffs on Australian imports. 

Additionally, Australia is also subject to “national security” tariffs under section 232 of the Trade Expansion Act of 1962.¹⁵  Under these tariffs, materials which are commonly used in the production and repair of aircrafts and aircraft parts such as steel, aluminium, copper products and their derivatives are subject to a 10% to 50% tariff, and certain computer chips and products containing those chips are subject to a 25% tariff.¹⁶ This puts significant financial strain on Australian aviation industry operators and original equipment manufacturers. 

Effects on the Tourism and Aviation Industry in Australia 

What do the tariffs mean for the tourism and aviation industries in Australia?

The heightened uncertainties and financial market volatility, as a result of the US tariffs, leads to economic consequences such as reduced spending by businesses and households, which has knock-on effects to employment and productivity.¹⁷   

For the Australian aviation industry, this will likely mean lower demand for air travel, as the lowered productivity will lead to increased costs of production and delivery delays in aviation. Flag carriers will be hit hard as customers will choose between cheaper options or not flying at all. Low-cost airlines are expected to experience these impacts to a lesser degree, but they will not have the environmental, social, and governance (ESG) focus nor development pathway for sustainable aviation fuel or net-zero emissions, leading to a poorer outcome for the industry generally. ¹⁸

The status of substantiable growth for the Australian aviation market is adversely impacted by the following:

• Global financial markets reacting to the US tariff announcements on “Liberation Day” and there continues to be ructions to the market caused by the continued tariff negotiations.¹⁹  While some markets in East Asia notch new highs following the trade talks between President Trump and China President Xi Jinping, other economies around the world, such as manufacturing in the European Union and Asia have become weakened and even stagnant as tariffs take a hit on factory order volumes.²⁰  
• US tariffs jumping to the highest rates since 1909—given that the United States is the world's biggest sovereign economy, this is going to take the “wind out of the sails” of not only the aviation industry but the global tourism industry.²¹
• A weaker GDP growth, which will see a lower demand for air travel.

Hence, economic experts now predict that the global financial future is more unpredictable, over a much wider range of possible outcomes.²²  

Furthermore, the Australian tourism industry's sustainability is based on a balance of increased international patronage. For our international guests, the global economic instability poses risks to international travel flows and shifts their preferences away from extended stays, impacting Australia's tourism, which consists largely of long-haul tourists.²³ Indeed, international travel has only returned to pre-COVID-19 levels just last year.²⁴  

It is also important to remember that the tourism industry's success is based on "disposable income." As such, the growing public sentiment regarding a global economic slowdown does not give households the carefree attitude and financial confidence that is necessary in the spending of disposable income. ²⁵ In times of global economic uncertainty, people start replicating "squirrels"—they stop spending and start accumulating enough "nuts" to withstand the economic famine. As such, it is expected that the tourism industry in Australia will also suffer from the US tariffs. 

Complicating Factors

Beyond the US tariffs, a complicating factor to the outlook of the aviation industry is the advent of the emerging global ESG principles that are driving transformative changes across the industry, particularly in reducing environmental impacts.²⁶     

For major airlines, ESG is becoming central to operational and strategic decision-making, rather than a mere compliance obligation. Those that integrate ESG into their core operations are better positioning themselves for the future to improve efficiency, maintain access to capital, build resilience and respond to current market pressures.

With growing expectations from customers, investors, and governments, it is clear airlines are facing a critical intersection of challenges: managing tariff-induced cost pressures while simultaneously meeting escalating environmental, social, and governance commitments and navigating the complex legal landscape.

K&L Gates: Tracking Updates From the Trump Administration 

K&L Gates as an international firm, with offices across four continents, is uniquely positioned to provide advice on matters relating to international aviation and tourism.

Our Policy and Regulatory team in the US continues to assist clients in navigating this rapidly evolving federal policy and regulatory landscape. The K&L Gates’ Guiding Through Change initiative monitors new actions from the White House and federal agencies to provide analysis on widespread industry ramifications. 

To view more, go to our initiative’s landing page for insights on the latest updates. 

The authors acknowledge the assistance of Ziqi Zhao, paralegal, in the preparation of this article.

From 1 July 2026, the national minimum wage has increased by 6% to AU$26.44 per hour. Award minimum wages have also risen, by 4.75%. 

The Fair Work Commission noted that determination of the review was particularly challenging this year because of the unusual degree of complexity in the economic and business performance in Australia. Ultimately, the Fair Work Commission cited moderate wage growth, increasing inflation, a predicted slowing economy over the next year, and uncertainty in the Middle East as reasons for its decisions. 

Echoing its concerns from the 2025 national wage review, the Fair Work Commission was again fundamentally guided by its view that most Award-reliant employees found the real value of their wages to be lower than prior to the July 2021-post-panedmic inflation spike. The Fair Work Commission noted the resulting 'real wage gap' is particularly affecting the living standards of the low paid and their capacity to meet non-discretionary needs. 

The Fair Work Commission also determined that structural changes to Award wages were necessary, electing to eliminate classifications paid at the lowest wage rates; C13 and C14. 

The C13 rate is the lowest wage rate applicable to ongoing employment in the Award system, while the C14 rate is a transitional wage rate applicable to a limited initial period of employment. The phasing out of the C13 and C14 wage rates will occur in three stages, and C12 will then become the lowest wage rate for ongoing employment. The first of the three stages involves additional, proportional increases to the relevant wage rates. 

The Fair Work Commission otherwise noted it intends to continue its review of particular Award classifications with the objective of eliminating gender-based undervaluation. The Fair Work Commission confirmed review of priority Awards is now complete and will see a phasing in of wage increases accordingly. The Fair Work Commission intends to have completed the entirety of this review by the delivery of the national wage decision next year.  

At 1 July 2026, the Superannuation Guarantee rate will remain unchanged at 12%. An annual maximum contribution base of AU$270,830 for the 2027 income year will apply. 

This means that once an employee's ordinary time earnings exceed AU$270,830 per annum, employers are not required to make further superannuation contributions under the Superannuation guarantee legislation. If separate contractual obligations to pay superannuation apply, these obligations are unaffected.

With the introduction of Payday Super, there will be no per quarter maximum contribution base. 

The changes will apply from 1 July 2026.

The Fair Work Act’s high income threshold will also be indexed from 1 July 2026, and has increased to AU$190,100. Non-award and non-enterprise agreement covered employees who earn in excess of AU$190,100 will be unable to bring an unfair dismissal claim.

The value of penalty units applicable to the Fair Work Act has increased with effect from 1 July 2026 from AU$330 per unit to AU$364 per unit. 

What Should You Be Doing From 1 July?

Employers should:

• Review annualised salary arrangements to ensure that the annualised wage rate is sufficient to meet or exceed the employees’ minimum award or minimum wage entitlements taking into account the 4.75% or 6% increase respectively.
• Update payroll systems and processes to ensure that wages and superannuation contributions take into account 1 July 2026 increases and removal of the per quarter maximum contribution following the introduction of Payday Super.
• Review enterprise agreement pay rates (where applicable) and ensure the pay rates do not fall below the applicable modern award base rate or the national minimum wage (as applicable).
• Ensure all employees who are eligible are being paid the appropriate super guarantee. 
• Be mindful of the new high income threshold of AU$190,100.

How Can We Help?

If you have any questions about the effect of the 1 July 2026 threshold increases on your payment obligations as an employer, please contact our Labour, Employment and Workplace Safety team.

Date of Commencement

The WFH Bill is expected to take effect on 1 September 2026. However, small businesses (employers with fewer than 15 employees) will have a deferred commencement date of 1 July 2027.  

Right to Work From Home

The proposed reform moves working from home from a discretionary arrangement to a statutory entitlement. Employees will have a right to work from home where their role can reasonably be performed remotely as follows:

• Up to two days per week for full-time employees; and
• A pro-rata entitlement for part-time employees (with the calculation method to be set by the regulations).

This places the onus on employers to justify any refusal, similar to flexible working arrangements for employees with certain protected attributes under the Fair Work Act 2009 (Cth) (the FW Act). 

Eligible Employees

Many employees will be considered “eligible” to exercise the right, with limited exclusions that include:

• Employees on probation;
• Employees undertaking an apprenticeship, traineeship, internship, graduate program, work experience program or similar program; 
• Certain 'regulated workers' within the meaning of the FW Act (e.g. gig workers); or
• Casual employees not employed on a regular and systematic basis. 

Most significantly, any employees to whom the existing flexible working provisions in the FW Act apply (such as those with parental or caring responsibilities, with a disability, who are pregnant, who are over 55 years, or are experiencing or supporting somebody experiencing family and domestic violence) and who are seeking flexibility because of those circumstances are not eligible under the new WFH Bill. Generally, these individuals would make a request under the federal flexible working arrangements provision.

Practical Operation

The WFH Bill proposes that to exercise the right, an employee must provide written notice specifying their proposed working from home arrangements, including the days on which they propose to work from home and the intended place of work (if not their home). Employers will then be required to respond within 21 days.

If an employer does not agree to the requested arrangement, the response must:

• Confirm whether alternative working from home arrangements can be offered; and
• Set out reasons why the requested arrangement is not considered reasonable.

Grounds for Refusal

An employer may refuse a request only where it is not reasonable for the employee to work from home. While there are some similarities to the FW Act flexible working arrangements, the WFH Bill prescribes a closed set of factors that must be considered, focussing on:

• The inherent requirements of the role;
• The operational impact that working from home would have on the employer; and 
• Any prescribed matters. 

Relevant considerations include productivity, supervision, safety, customer impact, confidentiality, cost, and the practicality of altering working arrangements. Employers must assess these factors on an evidence-based basis.

Additional Employer Obligations

Where an employer is required to allow working from home under the WFH Bill, they will also be required to meet “reasonable costs” associated with the arrangement. This may include essential equipment and secure access to systems.

Pro-Rata Arrangements

For employees not working 38 hours per week, the entitlement is pro-rated. However, the method of calculation is left to the regulations, which have yet to be released.

Dispute Resolution

Notably, this right is to be introduced via an amendment to the Equal Opportunity Act 2010 (Vic) and will sit within its framework. Disputes between employees and employers may be brought to the Victorian Equal Opportunity and Human Rights Commission. Should conciliation between the employer and employee fail, the matter may then proceed to the Victorian Civil and Administrative Tribunal who may order that the employer permit the employee to work from home. 

Takeaways for Employers

The WFH Bill represents a material change to how flexible work arrangements are managed in Victoria. In particular, if it passes:

• Refusals of working from home will be constrained and subject to a structured statutory test;
• Decision-making will need to be clearly documented, reasoned and evidence-based; and
• There is an increased risk of employee claims where requests are not appropriately assessed.

We recommend that employers pay close attention to the WFH Bill's passage and begin reviewing their policies, role design, and decision-making frameworks to ensure they are positioned to respond to requests consistently and in accordance with the proposed legislation. 

The authors would like to thank graduate Tom Denovan for his contributions to this alert.

The Act focuses on accelerating development through the following two major pathways: 

• Facilitating specific “Priority Projects.”
• Coordinating the development of entire precincts for “State Development Areas.” 

To support achievement of the above, the Act establishes a new office of the coordinator general (Coordinator General) to identify and oversee priority projects and state development areas, as well as to provide advice and make recommendations to the Minister of State Development (the Minister) in relation to them.

Priority Projects 

As stated in the Act’s second reading speech, the government seeks to increase the competitiveness of Western Australian industry by prioritising projects in the following: 

• Critical minerals processing facilities.
• Naval shipbuilding.
• Large-scale renewable energy projects.
• Net-zero hubs for green metals. 

Though the scope of priority projects in the Act is not confined to specific industries, and requires only that the project has strategic or economic significance to the state, the state’s industrial focus is reinforced through the Act’s prohibition on designating purely residential developments as priority projects. Projects designated by the Minister as a priority project will receive fast-tracked approvals, strategic recognition and coordinated engagement and support across government.

The naval and industrial focus of the Act aligns with Australia’s participation in the AUKUS security partnership with the United Kingdom and the United States, particularly Australia’s acquisition of conventionally armed, nuclear-powered submarines (each, an SSN) and the development of the infrastructure, technical capabilities, industry and workforce necessary to operate a sovereign SSN fleet. This accelerated development trajectory is further bolstered by the Cook Labor Government’s entry in October 2025 into a landmark Australia-US agreement supporting critical minerals and rare earths, enhancing cooperation and investment to diversify Western Australia’s mineral supply chains and manufacturing sectors.¹  Modification orders may be issued to modify how certain provisions of a designated Act apply to a priority project, streamlining approvals. Priority projects may also gain access to several coordination mechanisms that may be exercised by the Coordinator General to ensure efficient delivery: due regard notices, time frame notices and joint decision notices.

Modification Orders

The Minister may, with the approval of the Premier, make a modification order providing that specified provisions of a designated Act do not apply, or apply with specified modifications, in relation to the making of a decision for a priority project. 

There are around 40 designated Acts that these modification orders may impact, including the Planning and Development Act 2005, the Biodiversity Conservation Act 2016 and the Heritage Act 2018, with some exclusions. 

In making a modification order, the Minister must consider it appropriate to do so because, in the Minister’s opinion: 

• The making of an order will prevent or reduce duplication of statutory or administrative processes or requirements that apply to the priority project or to a part of the priority project.
• Having regard to the purpose of the affected designated Act and the object of this Act, the making of the order will not prevent the priority project or part of the priority project from being effectively regulated under law. 

Noncompliance by a proponent for the priority project with any conditions set out in a modification order is an offence, punishable by a AU$100,000 fine and a daily penalty of AU$5,000 for each day during which the offence continues. 

To rein in the potentially broad and controversial effects of a modification order, the following checks and balances apply: 

• Consultation with each affected public authority and the proponent for the priority project prior to the making of an order.
• A modification order cannot have the effect that a key regulatory authorisation that would otherwise be required in relation to a priority project is not required.
• A modification order cannot exclude or modify the application of a provision of a designated Act, to the extent that it relates to an assessment under a bilateral agreement or a process that the Commonwealth minister administering the Environment Protection and Biodiversity Conservation Act 1999 (Cth) has decided to use under section 87(1).
• All orders are to be tabled in Parliament and subject to disallowance processes. 

Due Regard Notices

The Minister may give due regard notices to a public authority responsible for making a decision regarding the implementation of a priority project. A due regard notice requires the relevant responsible authority in making that decision to have due regard to a set of considerations specified by the Minister.

A due regard notice therefore allows for ministerial elevation of the importance of particular matters within a public authority’s decision-making process. Despite this, the notice cannot itself permit an authority to consider matters outside the scope of matters it may have regard to under the designated Act. 

Due regard notices may not be given to the Environmental Protection Authority or Heritage Council of Western Australia, nor to another minister without consent. 

Time Frame Notices

The Minister may also accelerate decision-making by issuing time-frame notices to a relevant public authority making decisions under a designated Act or the Aboriginal Heritage Act 1972. A time-frame notice requires that the responsible authority perform the designated function within a certain time period, which must not be less than 20 business days after the day on which the notice is given. 

As there are around 40 designated Acts under the Act, the scope of decision-making public authorities that may potentially be issued a time-frame notice is broad. An extension on the designated time frame may be granted by the Minister on application by the responsible authority. 

A time-frame notice may not be given to another minister without consent. 

Joint Decision Notices

The Minister may issue joint decision notices, requiring decisions to be made jointly between the public authority under a designated Act and the Minister or the Coordinator General. Upon the issuing of such a notice, the responsible authority must consult, and if possible agree with, the relevant coordination authority on the designated decision to be made. If agreement cannot be reached, the matter may be referred to the Minister and the responsible minister for the responsible authority or otherwise to the Premier for final determination.

A decision made under this process will be valid as if it were made by the responsible authority under the ordinary procedure applying under the designated Act. Revocation or variation of the joint decision is prohibited without consultation with the relevant coordination authority. 

A joint decision notice cannot be given to the Environmental Protection Authority, Heritage Council of Western Australia, Western Australian Planning Commission or another minister without consent. 

State Development Areas

State Development Areas (SDAs) are designated precincts identified to support Western Australia’s economic and industrial growth. These may include renewable energy precincts, industrial circular economy hubs and project hubs supporting industry clusters. An accompanying State Development Area Plan (SDA Plan) will outline the strategic direction for the nominated area, including setting out the following:

• Economic, environmental and social considerations.
• Intended precincts, developments and subdivisions in the plan area.
• Infrastructure and services required to support the plan area. 

Projects undertaken in an SDA will be assessed by a public authority with regard to the SDA Plan. In doing so, the government hopes to create investment-ready areas, giving clearer signals to industry and investors. 

Despite this, the Minister may give a public authority written notice exempting the public authority from the requirement to have due regard to an SDA Plan in making decisions under a designated Act. 

A newly operational SDA does not affect the application of any improvement scheme or planning scheme applying to that area under the Planning and Development Act 2005 or another written law at the time of operation. 

Next Steps

The Act came into operation on 18 February 2026 following the publication of the State Development Act 2025 Commencement Proclamation 2026 in the Government Gazette, save for sections 115–117 amending the Petroleum Legislation Amendment Act 2024, which are to be commenced at a later date.

As of the date of this article, no priority projects or SDAs have been designated. 
 

This edition of the K&L Gates Competition & Consumer Law Round-Up provides a summary of recent and significant updates from the Australian Competition and Consumer Commission (ACCC), as well as other noteworthy developments in the competition and consumer law space. If you wish to have any more detail about the issues outlined in this newsletter or discuss them further, please reach out to any member of the K&L Gates Competition and Consumer Law team.

Enforcement

• Australian Government Grants an Additional AU$67.7 Million to the ACCC Over a Four-Year Period to Strengthen Competition and Consumer Law Enforcement Capabilities
• Coles Found by the Federal Court to Have Misled Consumers in its "Down Down" Promotions
• AU$15 Million Penalty Ordered Against Emma Sleep for Misleading Statements About Sale Prices

Mergers and Acquisitions

• ACCC Requires Two More Merger Notifications to Proceed to Phase 2 Review (MicroStar - Konvoy and Insurance Australia Group - RAC Insurance)

Notifications and Authorisations

• ACCC Proposes Not to Authorise Screen Producers Australia to Negotiate With Broadcasters and Streaming Platforms
• ACCC Proposes to Grant Authorisation for Australian Hotels Association Members to Engage in Collective Bargaining

Noteworthy Developments

• Heightened ACCC Attention on Compliance With Consumer Guarantee Rights in the Electronics and Whitegoods Sector
• ACCC Granted Leave by the Federal Court to Intervene in the Epic Games, Inc v Apple Inc Proceedings
• Streamlined Competition Exemption Powers for Emergencies and Exceptional Circumstances, Alongside Increased Penalties in the Petroleum Marketing Industry

Click here to view the Round-Up.

The table below outlines the key features of break fees generally and naked break fees (sometimes also referred to as a "bare break fees" or "naked no-vote break fees"):

The firm recently acted for Ausmincon Holdings Limited on a merger by way of a court approved scheme of arrangement with AFRY AB in the Federal Court of Australia, under which AFRY AB acquired 100% of the issued share capital in Ausmincon Holdings Limited. This deal featured a naked break fee which was expressly considered by Justice Jonathan Beach in Re Ausmincon Holdings Limited [2026] FCA 280.

Justice Beach found that the naked break fee did not constitute unacceptable circumstances, but rather "the price of buying the opportunity” to put the AFRY AB offer to the Ausmincon Holdings Limited shareholders. In coming to this decision, Justice Beach considered the following:

• Circumstances where the bidder's preference was a traditional M&A transaction which would involve customary warranties and other deal protection arrangements;
• The market soundings leading up to the negotiation of the scheme implementation agreement;
• The quantum of the naked break fee being approximately 1% of the scheme consideration;
• The naked break fee being a reasonable estimate of the actual costs to be incurred by the bidder;
• The target's financial position which could facilitate payment of the naked break fee;
• The premium of the bid compared to the independent fairness report; and
• The likelihood of support from the target's shareholders.

This decision highlights that despite being unusual, naked break fees are not automatically unacceptable. However, as naked break fees carry a much higher regulatory risk than conventional break fees, they should be approached with caution and carefully considered before being implemented.

On 14 May 2026, the Federal Court of Australia (the Court), in a prosecution commenced by the Australian Competition and Consumer Commission (ACCC), found that Coles Supermarkets Australia Pty Ltd (Coles) had engaged in misleading conduct and made misleading representations about the price of products in trade or commerce between February 2022 and May 2023.

The proceedings, centred on Coles’ long-running “Down Down” promotional campaign which advertised lower prices on frequently bought grocery items, such as milk, bread and laundry liquid. 

The Court found that, for a discount on a product to be a “genuine discount,” it required the following:

• A pre-promotional price that was commercially justifiable and not artificially inflated.

• Commercial volumes of the product sold at that pre-promotional price.

• Importantly, a reasonable period during which the product was ordinarily offered at that price.

The Court held that a price that was only ever held for a short time (in these instances, about four weeks), notwithstanding that these prices were commercially grounded (the prices followed supplier price increases, were based on suppliers’ recommended retail prices (RRPs) and, hence, were “genuine prices”), was, in the context of Coles’ long-standing pricing behaviour and policies/“guardrails,” too short to constitute a genuine reference price, rendering the represented discounts illusory and misleading.

The Court stated that had the prices been held at the higher prices for a period of 12 weeks immediately prior to the “Down Down” promotion, the conduct would not have been misleading. However, while it was not explicitly stated, it is clear that the reference to the 12-week period related directly to Coles’ own policies/guardrails which were in place prior to the period in which the conduct took place—further detail below.

According to ACCC Chair Gina Cass-Gottlieb, the ACCC brought these proceedings as it considered that “Coles’ pricing practices within its ‘Down Down’ program made it harder for consumers to identify genuine value for money while shopping for household essentials.” ¹

This decision by the Court has important implications for businesses and their promotional strategies and activities. We set out a number of key considerations for businesses in light of the Court’s decision in more detail below.

Background

The ACCC commenced proceedings against Coles in September 2024 over alleged false or misleading representations made to consumers.

Specifically, Coles was alleged to have briefly raised prices (for periods of about four weeks or less) on 245 items (the Affected Products) by at least 15% before putting them on “Down Down” promotions. The Affected Products included Arnotts’ Shapes biscuits, Bega cheese, Band-Aids, Danone Yoghurt and more.

The Affected Products were marked with “Down Down” pricing tickets which noted both a promotional price and a “was” price for each product (being the temporarily increased price). Even though the promotional price was lower than the “was” price, it remained higher than the regular price before that temporary increase.

The ACCC’s allegations were that the “Down Down” pricing tickets constituted false or misleading representations that the Affected Products’ promotional price was a genuine discount, even though the “was” price displayed on the pricing tickets was the temporarily increased price and not the product’s regular price. Therefore, the discounts did not actually exist.

Coles denied the alleged representation, asserting that supplier cost increases and related negotiations resulted in the price increases from which the discounting occurred. Coles argued that the “was” price reflected the immediately preceding regular price and that the promotional price therefore represented a genuine discount.

For completeness, in parallel with the ACCC prosecution, a class action proceeding was commenced making similar allegations, and the initial trial involved all issues of liability in both the ACCC proceeding and the class action proceeding (the Joint Liability Trial).

The Joint Liability Trial was conducted using 12 out of the 245 Affected Products (Sample Products), all of which were manufactured and packaged grocery products instead of fresh products.

Is the Discount Genuine or Illusory?

The Court approached the issue of what separates a genuine discount from an illusory one, ultimately finding that the duration that the “was” price had been offered, particularly in the context of Coles’ own policies and guardrails that were in place in the three years prior to the conduct taking place (and which were amended at the conduct’s commencement), was the decisive issue in this case.

The Court accepted that most ordinary consumers, when grocery shopping, would not have formed a conscious belief about the period for which the “was” price was offered. 

As such, consumers would only have an intuitive sense that the discount being offered was genuine. In addition, incorporated into the notion of a genuine discount is the idea that the previous price was an ordinary price that had been offered by Coles for a reasonable period. 

Therefore, the Court’s view was that the “Down Down” pricing tickets conveyed a representation about Coles offering a genuine discount.

Was the Discount Genuine?

To determine whether the discount was genuine, the Court had to consider all relevant factors, including whether the “was” price shown on the “Down Down” pricing ticket truly reflected the product’s usual sale price over a reasonable time frame.

These relevant factors included the following:

• The commercial circumstances under which the price of the product had been determined.

• The level at which the price was set.

• The period over which the product was sold at that price.

• The volume of product sales at that price.

Based on its assessment of the circumstances under which Coles increased the Sample Products’ retail prices before placing them on “Down Down” pricing tickets, the Court concluded that the price increases were due to an increase in supplier cost prices and that Coles’ decision to increase retail prices (based in part on the price increases and suppliers’ RRPs) was commercially justifiable. The Sample Products were both offered for sale at the “was” price in Coles’ ordinary course of business and were also sold in commercial volumes.

Nevertheless, the determining consideration was the duration for which the Sample Products were sold at the “was” price. 

The Court considered in detail Coles’ own policies and in particular the “guardrails” that had been in place since September 2019, particularly the following:

• The requirement that the product which was the subject of the “Down Down” promotion must not have been offered at lower than the “was”/regular price at any time in the preceding 12 weeks.

• The requirement that the product must have been sold at the “was”/regular price for the four weeks immediately prior to the launch of the promotion (or for four out of the previous six weeks).

The Court also did the following:

• Considered that the above guardrails “provided contemporaneous evidence of Coles’ efforts to ensure that the Down Down price represented a genuine discount from the previous price”²—noting that the Court discounted the fact that the guardrails were amended immediately prior to the conduct commencing as being similarly probative.

• Proceeded to state that “…In that regard, the guardrails demonstrate that Coles was aware of the potential for the Down Down promotional strategy to mislead consumers….”³

• Therefore concluded that 13 of the 14 “Down Down” pricing tickets were misleading, as they had not been sold at the “was” price stated on the ticket for a reasonable period prior to the “Down Down” promotion. The only exception was the Nature’s Gift Dog Food “Down Down” pricing ticket, which was not misleading as it did not include a “was” price.

As such, the discounts represented on the “Down Down” pricing tickets were not genuine. In offering the Sample Products on the “Down Down” pricing tickets, Coles had done the following:

• Engaged in misleading conduct in trade or commerce.

• Made a misleading representation with respect to the price of the Sample Products in connection with the promotion of the supply of the Sample Products in trade or commerce.

Penalties

The question of penalties has yet to be determined by the Court. However, Ms. Cass-Gottlieb has stated that the ACCC will be seeking a substantial penalty to reflect “the importance of accurate pricing for consumers.”⁴

What Does This Mean for Your Business?

The Court determined that the concept of a genuine discount inherently includes the assumption that the referenced prior price reflects the ordinary sale price over a reasonable period. 

While there has been significant “publicity” about the “requirement” to make available the products at the “was” price for a period of 12 weeks, as is set out clearly above, this requirement was clearly contextual to Coles’ factual circumstances and is not, in our view, a “hard and fast rule.”

The Court determined that the concept of a genuine discount inherently includes the assumption that the referenced prior price reflects the ordinary sale price over a reasonable period. Having said that, businesses should exercise care when using “was/is” or “strike through” pricing strategies in promotions, as they are implicitly making a factual representation about the product’s pricing history.

To manage risks in relation to misleading conduct and representations, businesses should “take stock” of their promotional strategies, activities and mechanisms to ensure they are not at risk of contravening the Australian Consumer Law (ACL).

When assessing their promotional strategies, activities and mechanisms, businesses should consider the following:

• What is a reasonable period for the product to be offered at the pre-promotional price/“was” price?
  • Are the prices of the product relatively stable, or do they change frequently?
• What internal guardrails can be established (e.g. minimum price sale periods) to manage the risk of offering an illusory discount?
  • According to the promoter’s rules, how long must product prices remain stable/the products be sold at (or at least offered at) before the product is offered on promotion?
• What is the volume of sales for each product at the pre-promotional price?
  • Businesses should keep records of pre-promotion sales volume (or at least the period of time that the product was offered at the “was” price), promotion sales volume and other relevant data points. 
• What is the commercial basis behind pre-promotional prices?
  • If challenged, can the business provide sufficient evidence on why each specific price point is commercially justifiable? For example, by providing supplier cost data or internal documentation outlining the methodology used in price determination.

If your business cannot confidently establish that a pre-promotional reference price meets the factors for being a “genuine discount,” the most prudent approach may be to avoid “was/is” or “strike through” pricing and identify other ways to communicate the product’s value.

If you require any assistance in conducting an assessment on whether your business’s promotional activities and strategies pose a risk under the ACL, please contact us and we can assist you further.