ACCC flags competition concerns in Perpetual-Trust merger
The Australian Competition and Consumer Commission (ACCC) has raised concerns that Perpetual's proposed acquisition of The Trust Company would entrench its position in a number of market areas and is seeking further industry comment on merger.
The ACCC stated that its inquiries found concerns within the market that the merger would entrench Perpetual's position in the area of the provision of trustee services for debt capital market products.
Further concerns were also raised around the provision of custodial services with the ACCC noting that both Perpetual and The Trust Company are strong providers of particular types of custody services.
"Based upon its inquiries, the ACCC's preliminary view is that the proposed acquisition has the potential to result in overall harm to competition by further strengthening the position of Perpetual in the supply of at least some corporate trust services and eliminating the actual or potential competitive constraint between the merger parties," the ACCC stated in a Statement of Issues released to the Australian Stock Exchange today.
ACCC said market feedback "about the ability of other parties to constrain the merged entity has been mixed" but there were some factors that would constrain Perpetual in the market "including competition from existing trust corporations and the ability of some customers to provide these services in house."
The ACCC noted that verifiable market share figures were not available and it had received conflicting information about the strengths of competitors and potential competitive constraints.
The statement said that market participants had consistently indicated that Perpetual led the corporate trust services market while The Trust Company was most likely its leading competitor.
The ACCC said it would also examine how The Trust Company's 13.4 per cent shareholding in Equity Trustees, which would shift to Perpetual under the proposed merger, may affect competition and pricing in the market.
As a result the ACCC would seek further information about the relative competitive positions and market shares of Perpetual, The Trust Company and their competitors with submissions to close by August 15 and a decision due to be announced on September 19.
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