Only 50% of deals given a red light on issuance of Statement of Issues are cleared by the regulator
The Australian Competition and Consumer Commission (ACCC) is taking longer to consider transactions which have warranted the publication of a Statement of Issues (SOI), new research finds.
In its inaugural report on trends in complex ACCC merger review cases, Johnson Winter & Slattery said that since 2005, the regulator has increased processing time from three to five months for all decisions, from four to seven months for red-light transactions, and from two to four months for orange-light transactions.
Under the agency’s merger review process, the ACCC’s views in an SOI are classified under a “traffic light” system, with “red light” deals having issues that are likely to be of concern, “orange light” deals having issues which may be of concern, and “green light” deals having no issues.
For red-light transactions, JWS said that the ACCC cleared 50% and blocked 26%. Of the cleared transactions, 41% did not require a remedy while 44% required divestment.
For orange-light transactions, the ACCC cleared 68% and blocked 13%. Of the cleared transactions, 94% did not require any remedy and 6% required a remedy.
For all matters with an SOI, the ACCC took 4.7 months on average for a decision. The agency took an average of 5.1 months to consider red-light SOI transactions. It took the ACCC longer to approve red-light SOI transactions (5.3 months) and red-light SOI transactions which required remedies (5.8 months). When the SOI had a red-light but did not require remedies, the agency took 4.6 months. For orange-light transactions, the average was 4.1 months.
The industries most hit by SOIs are grocery, health, retail, industrial, media, and infrastructure. These sectors make up 51% of all SOIs since 2005. Health (42%) and finance (38%) had the lowest clearance rate. Media (89%) and transport and tourism (71%) have had the highest clearance rate among sectors.
JWS partner Sar Katdare, who authored the report, said that the ACCC may be taking longer to clear reports with SOIs since those that do warrant the publication of the document are more complex deals. Improvements to the informal review process have also made the clearing process more in-depth and rigorous, he said.
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In its inaugural report on trends in complex ACCC merger review cases, Johnson Winter & Slattery said that since 2005, the regulator has increased processing time from three to five months for all decisions, from four to seven months for red-light transactions, and from two to four months for orange-light transactions.
Under the agency’s merger review process, the ACCC’s views in an SOI are classified under a “traffic light” system, with “red light” deals having issues that are likely to be of concern, “orange light” deals having issues which may be of concern, and “green light” deals having no issues.
For red-light transactions, JWS said that the ACCC cleared 50% and blocked 26%. Of the cleared transactions, 41% did not require a remedy while 44% required divestment.
For orange-light transactions, the ACCC cleared 68% and blocked 13%. Of the cleared transactions, 94% did not require any remedy and 6% required a remedy.
For all matters with an SOI, the ACCC took 4.7 months on average for a decision. The agency took an average of 5.1 months to consider red-light SOI transactions. It took the ACCC longer to approve red-light SOI transactions (5.3 months) and red-light SOI transactions which required remedies (5.8 months). When the SOI had a red-light but did not require remedies, the agency took 4.6 months. For orange-light transactions, the average was 4.1 months.
The industries most hit by SOIs are grocery, health, retail, industrial, media, and infrastructure. These sectors make up 51% of all SOIs since 2005. Health (42%) and finance (38%) had the lowest clearance rate. Media (89%) and transport and tourism (71%) have had the highest clearance rate among sectors.
JWS partner Sar Katdare, who authored the report, said that the ACCC may be taking longer to clear reports with SOIs since those that do warrant the publication of the document are more complex deals. Improvements to the informal review process have also made the clearing process more in-depth and rigorous, he said.
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International firm acts in printing giant merger
