The Australian Competition and Consumer Commission announced today that it would not intervene in the proposed acquisition of Legal & General Australia Limited by Colonial Mutual Life Assurance Society Limited.
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.
'On this basis, the ACCC decided that the merger would be unlikely to substantially lessen competition in any relevant market. The merger may even be pro-competitive, as it creates a mid-size bankassurance company that may be better placed to challenge the large financial services players in both retail banking and retail insurance/superannuation/investment markets.'