Commonwealth Bank of Australia - proposed acquisition of remaining issued capital of Aussie Home Loans

Summary

Commonwealth Bank Australia proposed to acquire the remaining 67% of the issued capital in Aussie Home Loans that it does not already own.

Market definition

The ACCC assessed the effects of the proposed acquisition in the context of the following markets:
I. the national market for the supply of home loans; and
II. the national market for the supply of mortgage distribution services.

The supply of mortgage distribution services refers to mortgage aggregators and broker head groups providing lending institutions access to their networks of aligned brokers.

For the purpose of considering this acquisition, the ACCC did not consider it necessary to form a definitive view as to whether there is a separate market for the supply of mortgage referral services. The supply of mortgage referral services refers to mortgage brokers providing services and advice to consumers seeking to obtain a mortgage product.

Competition analysis

The ACCC considered that the proposed acquisition would be unlikely to substantially lessen competition in any relevant market. Factors informing this view included:

I. the competitive constraint arising from the presence of a number of alternative suppliers of home loans, including bank and non-bank lenders, and alternative suppliers of mortgage distribution services, including other broker head groups and mortgage aggregators; and

II. while Commonwealth Bank is likely to have the ability and incentive to increase the volume of, for example, "white label" home loan products that it would supply through Aussie Home Loans, this would not give rise to foreclosure of rival lenders to the extent that a substantial lessening of competition was likely to arise, since Aussie Home Loans brokers make up only around 6% of Australia's mortgage brokers, and there are many other distribution channels through which lenders can access brokers and borrowers.