The Australian Competition and Consumer Commission announced today it would not oppose the proposed merger of the Australian and New Zealand life insurance and funds management businesses of National Mutual and Lend Lease/MLC.
The ACCC found that the merger did not breach the market concentration thresholds that it uses to decide if a merger requires detailed examination.
When assessing a merger proposal under section 50 of the Trade Practices Act 1974, the ACCC first examines the level of concentration in relevant markets to determine whether the merger falls below certain thresholds. Usually, if:
the market share of the merged entity is above 40 per cent; or the combined market shares of the four largest market participants is above 75 per cent and the share of the merged entity is above 15 per cent;
then the merger is likely to merit detailed consideration.
"In this case, the ACCC examined a number of possible markets in the financial services industry and found that, even if narrow market definitions were to be adopted, the concentration thresholds would not be breached as a result of the merger", ACCC Chairman, Professor Allan Fels, said today.
"Taking relatively broad definitions, if the relevant markets were considered to be wholesale funds management, life insurance, superannuation and retail investment products, the market shares and concentration ratios would be as follows:
| Wholesale Funds Management | Life Insurance | Superannuation | Retail Investment Products | |
|---|---|---|---|---|
| National Mutual | 4.1% | 11.0% | 6.5% | 11.5% |
| Lend Lease/MLC | 5.3% | 11.0% | 7.3% | 8.8% |
| Merged entity | 7.4% | 22.0% | 13.8% | 20.3% |
| Pre-merger CR4 | 31.4% | 55.0% | 40.3% | 43.1% |
| Post-merger CR4 | 35.2% | 60.0% | 46.8% | 50.3% |
Sources: Assirt, AIMA and ISC
"On the basis of these and other concentration figures, the ACCC found that the merger would be unlikely to substantially lessen competition in any relevant market.
"In reaching its decision, the ACCC noted that AMP, which will be the merged entity's largest competitor in many areas, currently has a shareholding of just over 7.5% in National Mutual Holdings Limited. This holding does not entitle AMP to board representation. The ACCC does not believe that AMPs current shareholding in National Mutual has significant competitive implications in the context of the present merger proposal".