Posted on Sep 17, 2010 by Sergio Ulloa
The takeover bid by the National Australian Bank (NAB) for AXA Asia Pacific Holdings (AXA APH) has been rejected by the Australian Competition and Consumer Commission (ACCC) on the grounds of insufficient certainty that the proposed undertakings offered by the parties satisfy its competition concerns.
At the heart of the concerns for the commission were the distribution of financial services products through electronic investment platforms, and more specifically, the impact that the merger of NAB and AXA APH would effect on such distribution channels.
The precedent of NAB having bought the Australian operations of Aviva last year, with the purpose of gaining access to its successful Navigator platform, were also taken into consideration by the ACCC. Were the AXA APH acquisition to have gone ahead NAB would have gained control of the new North platform, which is regarded to belong to the next generation of electronic distribution platforms, and would have been able to capture a majority of the market in this area.
To address this concern NAB had proposed to sell the new North Platform, wealth.net, to IOOF, a 160-year+ Australian financial services organisation managing funds. However, the ACCC was not persuaded that this move would have helped to free up market competition in the distribution of retail investment products. In a statement released by the ACCC, Deputy Chairman Peter Kell said, "The undertakings as proposed place a heavy reliance upon IOOF having sufficient distribution capability to provide an effective competitive constraint upon existing key players in the foreseeable future."
Analysts believe that the merger between NAB and AXA APH would not have given the bank a dominant position in the Australian retail life insurance market, noting that the decision by the ACCC appears to have rather been focused on the distribution of investment products.
AXA and NAB have indicated that they both will review in detail the rejection by the ACCC before making a decision on their next step.
AXA Group is a worldwide leader in Financial Protection. AXA's operations are diverse geographically, with major operations in Europe, North America and the Asia/Pacific area.
Europe's fourth largest insurance company, with more than 300 years of experience in the global insurance industry, Aviva is committed to the safety and satisfaction of its customers. They sell a broad range of insurance products including motor and property insurance, protection and health insurance, business insurance, life insurance and pensions.
National Australian Bank (NAB) is a financial services organisation of nearly 40,000 people, more than 1800 branches and service centres, and more than 450,000 shareholders. NAB provides products, advice and services through its major Australian franchise and businesses in the United Kingdom, New Zealand, the United States and Asia. NAB is motivated to make a positive and sustainable impact in the lives of their customers and communities, and so build a business that can deliver on their goal of superior returns to shareholders.
For over 160 years, IOOF has accompanied Australians' journey towards a secure and rewarding financial future. IOOF's strength and reputation as a financial services organisation was cemented with the merger between Australian Wealth Management in April 2009 and the acquisition of Skandia in March 2009. The Group's products and services are designed to accompany the lives of around 700,000 Australians from wealth accumulation into retirement and across to the next generation.