Axa bids in strife with ACCC

Either of the offers for Axa Asia Pacific Holdings - from National Australia Bank and AMP - look like they will struggle to win clearance from the Australian Competition and Consumer Commission. The bid from NAB in particular (and which has the conditional support of the Axa AP board) faces the most issues, though AMP's bid (spurned by Axa) faces much the same hurdles as those facing NAB.

A statement of issues published by the ACCC yesterday in respect of both offers indicates that the competition regulator is reaching an unfavourable view of the prospect of further consolidation in the market for investment platforms.

The core of the objection is the pricing power that either NAB or AMP may command in this market segment.

Either could exercise such power by raising fees for use of platforms by financial advisers or maybe by demanding increased commissions from providers of investment products.

The ACCC said that its "preliminary view is that the proposed acquisitions may raise competition concerns in the national market for the supply of retail investment platform services to institutions."

The regulator noted "that NAB's proposed acquisition of AXA raises a higher level of concern then AMP's proposed acquisition of AXA."

NAB, the ACCC concluded, may have "an increased incentive and ability" to increase fees and seek rebates.

However, both offers appear to be on the nose with the ACCC even though AMP lacks a comprehensive investment platform of its own.

An additional concern is that NAB or AMP may reduce fees paid to third party providers of investment products seeking inclusion on investment platforms, while the in-house products of MLC (owned by NAB) or AMP "will dominate" those platforms.

The ACCC also cited concerns raised by regional banks that NAB (more so than AMP) might decline to market outsourced wealth management solutions to those banks (and which otherwise have limited offers of their own).

The ACCC invited comments on the issues raised and said it planned to make final decisions on the AMP and NAB offers for Axa Asia Pacific by 17 March.