Merger control regime: involuntary outcomes for voluntary administrations

The wholesale changes to Australia's merger clearance laws risk undermining the long established voluntary administration process, and will involve additional costs and potential incompatibility between mandatory review timeframes and the need for administrators to act quickly under Corporations Act 2001 (Cth) timelines, particularly given their personal liability for trade on costs. Amid concerns that these issues will threaten corporate turnarounds and therefore reduce competition in the market (at an already uncertain time for businesses due to ongoing geopolitical tensions), law reform has been proposed to allow administrators to continue to achieve key objectives under the voluntary administration regime.

Voluntary administration regime

The purpose of the voluntary administration regime under the Corporations Act is to maximise the chances of an insolvent company continuing in existence, or otherwise creating a better return for the company's creditors and members (rather than an immediate winding up of the company). Courts have held that administrators need to be provided with unpressured (but reasonably prompt) time to consider restructuring opportunities available ahead of the second creditors' meeting, at which point, the creditors vote on whether to execute a deed of company arrangement, end the administration or wind up the company. Often, administrators will be cash constrained in continuing to trade a business, and will run sale processes on very tight timeframes, with limited (if any) conditionality.

Merger control regime

The new merger clearance laws, which came into effect on 1 January 2026, introduce a mandatory and suspensory regime that requires notification to the ACCC of an acquisition that meets certain monetary or control thresholds, subject to exemptions set out in the Competition and Consumer (Notification of Acquisitions) Determination 2025 (Cth).

One such exemption under this Determination provides that an acquisition by an administrator will not be subject to the notification requirements under the merger control regime, however this exemption does not extend to an acquisition from an administrator. Given this, the sale of a distressed business or asset under the voluntary administration process if the thresholds are met will be notifiable under the merger control regime, in which case, merger clearance will need to be obtained from the ACCC.

Impacts to the voluntary administration regime

The timeframes set out in the new merger control regime are incompatible with the purpose of a voluntary administration.

The voluntary administration regime is intended to be as efficient as possible, as a protracted process risks an increase in administrator costs and reduces the chances of a successful corporate turnaround. It is also in the administrator's best interests to run an efficient sale process, as the administrator is personally liable for debts incurred by the company during the administration (and therefore needs to be confident that they can trade the business with a positive cashflow until the sale completes). This streamlined approach is reflected in the requirement that the administrator convene the second creditors' meeting within 20 business days from the day following the commencement of the administration, and to hold the meeting no later than five business days after that (unless extended by the court).

In contrast, the timelines set out for the merger control regime can be extensive. Waiver notifications are available for simple transactions where there are no competitive overlaps, and are decided on the papers – otherwise the ACCC's preference is a merger notification. Waiver notifications are decided without any ACCC engagement or feedback and if rejected the merger notification process (see below) would need to commence, meaning the waiver process should be approached with caution in an administration context where time is of the essence. Where a waiver notification is made, the ACCC has 25 business days to determine the notification but in practice it is deciding these within about 11 business days. As at 7 May 2026, the ACCC had approved 122 waivers and refused 10 since 1 January 2026.

Where waiver is not appropriate, and notification is required, there is a process of pre-notification engagement, following which the ACCC will determine whether an acquisition is approved following an initial assessment (known as "Phase 1") after 30 business days, with the ability to make a decision on day 15 and an average of about 19 business days (as at end April 2026). Note that a further 14 day review period applies after the ACCC determination, in which a sale cannot complete. If an in-depth assessment is required (known as "Phase 2"), the ACCC will have a further 90 business days to make its decision. This is not materially different from the previous voluntary regime for matters that raised potential concerns. If a waiver notification is sought, the ACCC has 25 business days to issue the waiver notification. In practice, however, the ACCC has been taking an average of about 11 business days to issue waiver notifications.

For merger notifications seeking a statutory approval, the shortest indicative timeframe for the parties to obtain statutory approval to proceed with the merger is likely approximately 10 weeks from bidder selection. This timeframe typically includes around 2 weeks for pre-notification, 6 weeks to obtain approval, and the mandatory 14-day statutory waiting period before closing can occur after approval is granted. However, this may be shorter for transactions with no issues, where a waiver is granted (say 4-5 weeks) or fast track notification decision (say 6-7 weeks). For some transactions, this process may take longer, particularly during pre-notification, depending on the competition issues and overall complexity of the transaction. Again, for transactions that raise possible competition issues, this isn't materially different to the previous voluntary regime. Under the new mandatory regime, the potential ACCC timeframe must now be considered for every voluntary administration, not just those raising competition issues (as under the pre-2026 informal merger clearance regime).

The timeframes under the merger control regime will impact voluntary administrations in the following ways:

• administrators may need to apply to the Court to extend the convening period beyond the 20 business days to allow interested parties to assess their relevant merger clearance notification obligations (if any);

• greater attention will need to be given to structuring the sale process to ensure that the new merger regime is dealt with up front;

• fewer bidders may participate in an administration sale due to the additional costs involved, including ACCC filing fees, preparation of the relevant ACCC documentation and diligence to assess whether the transaction may be notifiable. This may result in an administrator having to accept a bid below market, therefore impacting the return to creditors; and

• administrators may be unable to trade the business through the notification period on a positive cashflow basis if they do not have access to funding or given the increased costs required to keep the business operating while awaiting clearance under the merger control regime (noting that the administrator will be personally liable for debts incurred by the company during the administration). This may lead to administrators recommending that (in the absence of funding or a restructuring proposal that can be put to creditors for approval) the company be wound up in circumstances where a going concern sale may have otherwise been viable. Crucially, an increase in liquidations will have the effect of reducing competition in the market, which is inconsistent with the purpose of the new merger control regime (and particularly significant at a time when businesses are experiencing supply chain issues due to ongoing geopolitical volatility).

If an administrator puts the transaction into effect without satisfying its notification obligations, the transaction would be "void" (meaning it will be treated as never having come into effect) and significant penalties would apply. It is not clear how the unwinding of the transaction will play out in practice, however it is likely that the party funding the voluntary administration will likely have an unsecured claim against the administrator for restitution.

Proposed reforms

In response to Treasury's invitation for feedback, the leading association for professionals in turnaround management, corporate restructuring and special situations, the Turnaround Management Association Australia (TMA Australia), has proposed the following law reform to the new merger control regime:

1. extend the scope of the exemption in section 2-21 of the Determination to cover any acquisitions from an administrator, thereby excluding the sale of distressed companies from the notification process under the new merger control regime. Importantly, the TMA submission notes that the broadening of this exemption will not result in distressed asset sales avoiding scrutiny under the Competition and Consumer Act 2010 (Cth) (CCA) entirely. Such transactions will still be subject to section 50 of the CCA, which prohibits any acquisition of shares or assets that would have the effect or likely effect of substantially lessening competition; and

2. implement an expedited notification and approval process for the sale of a distressed asset, giving greater certainty to administrators and potential buyers in respect of timeframes and funding required to continue trading a distressed asset.

Key takeaways

The intersection of the new merger control regime and the long established voluntary administration process needs to be revisited, with the potentially lengthy timeframes for ACCC notification and approval requiring administrators to apply to court for extensions of the convening period, and the additional costs reducing the prospect of the going concern sale of a distressed asset.

The law reform proposed by the TMA Australia would alleviate these concerns, and allow the voluntary administration process to operate independently of the new merger control regime. In doing so, administrators would be able to carry out the purpose of a voluntary administration without the risk of substantially increased costs and below-market value offers. This will serve to improve the prospect of a successful corporate turnaround, which is crucial at a time where businesses are already experiencing uncertainty due to supply chain disruptions caused by heightened geopolitical tensions.

As at the date of this article, the relevant exemption for external administration under section 2-21 of the Determination has not been amended.