In brief

Proposed changes to Australia’s merger control regime were introduced to Parliament last month following extensive public consultation. For further information on these reforms, please see our alerts here, here, and here.

As a key element of the reforms, the new legislation will enable the ACCC to request that the Treasurer designate certain sectors of the economy where all mergers, acquisitions or other transactions would require approval from the ACCC, regardless of transaction size.

Comments made by the ACCC and the Treasury over the course of the reform consultation process indicate that the ACCC will use its increased powers under the new regime to examine transactions in the pathology and oncology-radiology sectors.

As early as March 2023, the ACCC identified the pathology sector as an area of concern due to apparent market concentration. This concern was echoed in the ACCC’s submissions to the Treasury’s Competition Taskforce in January this year. Similarly, Treasurer Jim Chalmers confirmed in his Second Reading Speech of the Bill that the Government would consider designation requirements for the oncology-radiology sector.

Designation under the new regime is anticipated to lead to a considerable rise in both time and costs for parties involved in transactions within these sectors.

In more detail

More recently, in an interview with the Australian Financial Review (AFR), ACCC Chair Gina Cass-Gottlieb expressly stated that once the new laws were passed through Parliament, the ACCC would request the Treasurer to designate the pathology and oncology-radiology sectors due to the ACCC’s concerns over concentration in these markets.

With respect to the oncology-radiology sector, the ACCC has previously expressed concern about the market concentration for cancer radiation clinics specifically, where two companies operate most private radiation clinics in Australia. Additionally, in its outline to the Treasury in March 2023, the ACCC identified the pathology services sector as being highly concentrated, with a small number of providers retaining significant market shares over time. The ACCC’s views in this regard are evidenced by its use of existing powers to prevent transactions in markets for the supply of community pathology services. In December 2023, it blocked a merger between the second- and third-largest pathology providers in Australia on the grounds that it would lead to a substantial lessening of competition in that market.

Finally, the ACCC has expressed ongoing concern about serial acquisitions and roll-ups in the cancer radiology and pathology sectors by private equity firms. The ACCC initially identified serial acquisitions as an issue affecting the pathology sector in its submissions to the Competition Taskforce in January 2024. In this vein, Ms Cass-Gottlieb’s comments indicate that the ACCC expects the designation function proposed by the new merger laws to enhance the visibility of these types of transactions and ensure they are subject to review by the ACCC. 

Businesses should anticipate that, unlike under the current voluntary notification regime, transactions within these sectors following the implementation of the reforms will be reviewed by the ACCC. It is also expected that the time and costs for businesses seeking clearance from the ACCC for these transactions will increase.