The Australian Competition and Consumer Commission has announced that it would not oppose the Commonwealth Bank of Australia’s proposed acquisition of the remaining 67% of the issued capital in AHL Holdings Pty Limited (Aussie Home Loans). The Commonwealth Bank already owns 33% of the shares in Aussie Home Loans.
In addition to providing other banking services, Commonwealth Bank supplies home loans directly to consumers and also through indirect lending channels via intermediaries such as mortgage brokers.
Aussie Home Loans operates a franchise network of approximately 750 mortgage brokers, providing a distribution channel for bank and non-bank lenders for the supply of home loan products and other retail banking and insurance products. Its brokers have access to a range of lenders’ mortgage products, and receive the benefit of Aussie’s brand recognition as well as administrative and technical support services.
In addition, these mortgage brokers may supply “white label” products, financed by a third party lender such as Commonwealth Bank, but rebranded as own brand home loan products of Aussie Home Loans.
"In reaching its view, the ACCC took into account the competitive constraint arising from the presence of a number of alternative suppliers of home loan products and mortgage distribution services," ACCC Chairman Rod Sims said.
While Aussie Home Loans franchisee brokers will still wish to offer home loans from a range of lenders, Commonwealth Bank is likely to have the ability and incentive to increase the volume of, for example, “white label” home loan products (financed by Commonwealth Bank and rebranded as Aussie Home Loans) supplied through the Aussie Home Loans network.
However, the ACCC concluded that this would not give rise to a substantial lessening of competition; 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.
The ACCC consulted widely with a range of interested parties, including bank and non-bank lenders, mortgage aggregators, broker head groups and industry bodies.
The basis upon which the ACCC has reached its decision will be outlined on the ACCC’s Mergers Register.