Proposed takeover could ‘harm competition’
(20 April 2010 – Australia) A report commissioned by AMP, the Frontier Economics report, has revealed that National Australia Bank’s proposed takeover of Axa Asia Pacific could cease AMP from remaining a competitive force in the wealth management space.
The report indicates that if NAB’s bid was to be approved by regulators, NAB, who is currently Australia’s fourth largest retail bank, would dominate the wealth management market due to the fact that NAB already owns MLC and recently purchased Aviva and JBWere.
According to The Australian, the report said that the NAB acquisition would harm competition compared with an acquisition by AMP because it would lessen competition in the activity of wealth management.
It would lessen the likelihood that AMP would remain a strong competitor because a NAB acquisition would decrease the likelihood that AMP would invest heavily in developing a leading-edge wrap platform to invest in funds. If AMP can acquire APH it will acquire the base from which it will be profitable for such investments to be made, the report also said.
The report also revealed that consumers choice would also be effected by the possible takeover, saying that it was because the major banks would act in coordination with each other.
They all operate in a large number of banking and wealth management markets and if they behave aggressively in one they will invite retaliation in one of the markets in which they are less strong, the report said.
The Australian Competition & Consumer Commission is due to release its decision on the takeover by Thursday this week, although some believe the watchdog could deliver earlier than expected.
According to The Australian, the report said that the NAB acquisition would harm competition compared with an acquisition by AMP because it would lessen competition in the activity of wealth management.
It would lessen the likelihood that AMP would remain a strong competitor because a NAB acquisition would decrease the likelihood that AMP would invest heavily in developing a leading-edge wrap platform to invest in funds. If AMP can acquire APH it will acquire the base from which it will be profitable for such investments to be made, the report also said.
The report also revealed that consumers choice would also be effected by the possible takeover, saying that it was because the major banks would act in coordination with each other.
They all operate in a large number of banking and wealth management markets and if they behave aggressively in one they will invite retaliation in one of the markets in which they are less strong, the report said.
The Australian Competition & Consumer Commission is due to release its decision on the takeover by Thursday this week, although some believe the watchdog could deliver earlier than expected.
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