The ACCC has decided to grant authorisation with conditions to enable the Australian Banking Association, its member banks “and other relevant industry participants to engage in discussions and exchange information for the purpose of developing and evaluating urgent responses to support the viability of wholesale cash distribution and access to retail cash services.”
The authorisation application follows concerns expressed late last year by the major supplier of cash-in-transit services in Australia, Linfox Armaguard, that the industry is not sustainable in its current form.
This became a hot topic in the industry very soon after the ACCC’s clearance for the merger between Armaguard and its principal competitor Prosegur in the third quarter of last year.
Various formulations of increased support from the major banks for Armaguard canvassed earlier this year proved unworkable in the end, either to the banks or Armaguard.
Threats by Linfox to tip its Armaguard subsidiary into administration ultimately proved to be hollow, and since an acute public relations crisis in March around the viability of the status quo for cash distribution, things have gone quiet.
This application for authorisation (which dates from November 2023) “relates only to discussions and reaching in-principle agreements about any industry responses to support ongoing access to cash.”
This application is separate from, though closely linked to, a separate application by the ABA to the ACCC in late March around contingency arrangements in the event Armaguard were to go belly up.
The ACCC hastily provided interim authorisation to that second application and the competition regulator is now assessing both applications in parallel.
The ABA has advised the ACCC that before adopting and implementing any agreed industry responses, it would seek a separate ACCC authorisation for the proposed way forward, if required.
The ABA originally sought authorisation until 30 June 2024. However, “due to the complexity of the issues associated with the cash-in-transit industry, and to allow a short period of additional time for the discussions to continue” the ABA applied to vary the term for which authorisation is sought until 31 October 2024.
The ABA now also seeks to widen the range of stakeholders that will be covered to (finally) include “other businesses and organisations that distribute cash”.
This means the slender ranks of cash-in-transit businesses that compete with Armaguard may be invited into these long-running discussions.
The ACCC has granted authorisation with conditions until 31 October 2024.
The ACCC said it “considers that the Proposed Conduct is likely to result in a public benefit through supporting the development of solutions to address concerns about the ongoing sustainability of cash-in-transit services, and thereby supporting ongoing supply of cash to banks, retailers and the community.
“In particular, the ACCC considers that information sharing between industry participants will provide a more complete picture about the concerns about sustainability of cash-in-transit services.
“The ACCC also considers that collaborative action is likely to better support ongoing provision of sustainable cash-in-transit services for the broad range of larger and small businesses across all areas of Australia that require these services.”
To mitigate the potential for public detriment, the ACCC has granted authorisation with conditions that require the ABA to provide regular reports to the ACCC about discussions undertaken and any agreements reached and to have a lawyer with competition law experience, approved by the ACCC, present at all meetings.
Maintaining access to cash in regional and remote communities will also be a key consideration for the ACCC in assessing the public benefits and public detriments likely to result from any proposed industry responses or solutions.
In this respect, the ACCC said it “understands that a focus of discussions to date under the interim authorisation granted by the ACCC in December 2023 has been on short-term assistance for Armaguard and involvement in these discussions has largely reflected the stakeholders that may be involved in providing that assistance.
"The ACCC expects that as more substantive discussions about consideration and development of broader solutions to the challenges to the sustainability of the cash-in-transit industry progress, a wider group of stakeholders will be increasingly and meaningfully involved.
"The inclusion of a broader stakeholder group will be a key consideration for the ACCC in assessing the public benefits and public detriments likely to result from any proposed industry responses or solutions.”