ACCC shoots down NAB bid for AXA

Australia's antitrust regulator has shot down National Australia Bank's A$13.3 billion bid for AXA Asia Pacific saying it would lessen competition in the wealth management market.

Tuesday, April 20th 2010, 10:09AM 4 Comments

by BusinessDesk

At the same time, it said AMP's rival, lower-value proposal wouldn't dampen competition. The Australian Competition and Consumer Commission (ACCC) said its main bone of contention for a NAB merger would be that retail investors would have substantially fewer platforms to access products, something that wouldn't happen under an AMP merger. The ACCC didn't have any competition concerns about superannuation, insurance and banking markets.

"Allowing NAB and AXA to merge would significantly diminish the incentives to compete for retail investment platforms used by investors that have complex financial needs," ACCC chairman Graeme Samuel said in a statement. "At the heart of the ACCC's decisions are concerns about innovation, and as a consequence future rigorous and effective competition between retail investment platforms."

Last December, NAB offered AXA AP investors either A$6.43 per share in cash, or $1.59 and 0.1745 of a NAB share per AXA AP share, trumping AMP's bid at A$6.22 a share. Under both deals, AXA SA, the French parent which owns 54% of the Asia Pacific business, would then buy back AXA AP's Asian business.

AXA AP's shares last traded at A$6.34 on the ASX.

The regulator said AXA was advanced in developing a low cost retail investment platform, and that this would probably improve the wealth management firm's ability to compete in the future. Until the platform was completed, the ACCC said it doubted existing rivals have an incentive to boost innovation in the near future.

Samuel also said there were high barriers to enter the wealth management sector. "Potential entrants need significant scale and established relationships with financial advisers to justify the initial and ongoing investments to enter with a platform," he said.

NAB said it was considering the decision before it will make any comment, while AMP welcomed the review. NAB has six weeks to persuade the regulator to change its mind before AXA AP, AXA SA or the bank can terminate the proposal after agreeing to "binding terms" last month.

« Brash says transparency is on the way for Huljich

Sovereign takes regulation bull by the horns »

Special Offers

Comments from our readers

On 20 April 2010 at 12:09 pm Bruce Puddle said:

The ACCC is hugely mistaken if they think that a take over of AXA by AMP will not greatly damage competition at least in the Risk Insurance Industry. It is a well known fact that AMP's current risk products are, in most instances, considerably higher priced and with less built in benefits. If AMP owned AXA there is a high likely hood of them removing those AXA risk products that undercut their pricey versions and if they treat the AXA advisors the same same arrogant, overbearing way they treat their own Advisors, us AXA Advisors will leave in droves. We simply would not recommend AMP's overpriced inferior policies.
Result = Competition in the Risk Insurance industry would be dealt a huge blow. Come on ACCC - you need to think this thing through a lot more clearly.

On 20 April 2010 at 2:20 pm Interested Observer said:

I think in some ways your article missed the point. The ACCC said that there were no competition issues with respect to Banking, Insurance and Funds Management but issues with wrap platforms. Given MLC (NAB Subsidiary) and Axa were strong in wrap platforms this was the key ACCC competition issue.

NAB now have 6 weeks to come back to the ACCC and see if they can do a "deal". My pick is that they will provide an undertaking to the ACCC about divesting a part of their Wrap business and the deal will then go thru. The real issue is if NAB are serious about chasing this, what part of the combined business will they divest to close the deal. Time will tell!

On 20 April 2010 at 9:32 pm John Adams said:

As an AMP adviser "yes overbearing "'and arogant.Closed shop.But quality Risk and Wealth .

On 22 April 2010 at 4:47 pm Patriot said:

The ACCC is interested in competition in AUSTRALIA! The NZ marketplace is not even a small consideration in their decision. In addition I am sure neither NAB or AMP are chasing this transaction for, or placing much value on (aside from nuisance value), the AXA NZ operations.