Coordinated effects in mergers and acquisitions – Considering the implications of cross directorships

Is your company contemplating a merger or increasing its shareholding in a competitor? Is it embarking on a joint venture with a competitor? Is there talk of acquiring an interest in an entity that operates upstream or downstream to your business operations? If a member of your board also sits on the board of a competitor, or a substitute or complementary company, an assessment of the implications of cross directorships and the resulting coordinated effects are integral in the initial stages of any proposed deal.

M&A – the legislative and ACCC approach

Section 50(3) of the Trade Practices Act 1974 (TPA) provides a non-exhaustive list of matters to be taken into account when assessing whether a merger or acquisition would be likely to substantially lessen competition in a market. The ACCC Merger guidelines 2008 (Guidelines) specify, in addition to the legislated list, other factors relevant to the ACCC's assessment of a proposed merger.