A recent statement by the Australian Competition & Consumer Commission (ACCC) chairman Graeme Samuel suggests that the ACCC may take a tougher stance on undertakings given during the informal merger approval process, or consider bringing to an end its practice of accepting such undertakings altogether.
Of particular concern to the ACCC are instances of 'bad faith' where the conduct of a party changed once an undertaking had been accepted by the ACCC and the merger completed. Mr Samuel remarked that:
'Before a merger is cleared, the priority of merger parties and their advisers is to get the deal done. Once the transaction is completed however, priorities shift and some parties view the undertaking commitments given to the ACCC as annoying constraints on their commercial strategies. Their priority becomes minimising the impact those undertakings have on their business... If the gaming of the undertaking process continues, the ACCC will have to seriously look at whether undertakings are an effective solution to dealing with problematic takeovers, or whether we need to seriously consider removing them from our consideration'.
Such comments can only be viewed as a stark warning that the ACCC is intent on closely monitoring and policing all future undertakings given in the informal merger clearance process, and will increasingly hold parties accountable for forgotten promises and breaches of good faith.
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