A monopoly in the supply of cash-in-transit services will be established in New Zealand after the Commerce Commission granted clearance for Evergreen NZ Holdings to acquire 100% of the shares in ACM New Zealand Limited from ACM Holdings (NZ) Limited.
Evergreen NZ is the owner of Armourguard, the country’s dominant supplier of cash-in-transit and related services.
ACM is the NZ subsidiary of Linfox Armaguard, with the dominant supplier of CIT in Australia electing to cut its losses in New Zealand and sell to its rival.
In a development with lessons for the industry in Australia, New Zealand’s Commerce Commission has accepted “information provided by Armourguard in its application, revealing that it is very likely that either Armourguard or Armaguard would cease to operate in the near future, resulting in a single national provider of wholesale cash-in-transit services regardless of whether the proposed acquisition proceeds.”
In reaching its decision, the Commission said it considered the potential impact of the proposed acquisition on competition in national markets for the supply of wholesale cash-in-transit services, retail cash-in-transit services, ATM maintenance services and precious cargo services.
“Ultimately, our assessment of the proposed acquisition focused on the supply of cash-in-transit services” the NZCC said.
Chair John Small said the Commission was satisfied that the acquisition “is unlikely to substantially lessen competition in any New Zealand market.
“As noted in Evergreen’s application, the relevant businesses of both Evergreen and ACM have suffered significant cash losses.
“An ongoing decline in the use of cash and reduced demand for cash-in-transit services – accelerated during the COVID-19 pandemic, and the rationalisation of bank branches – coupled with inflationary increases in costs makes it difficult for two national wholesale cash-in-transit providers to be financially viable.
“Without the proposed acquisition, we consider that it is unlikely that both Evergreen and ACM would continue to provide cash-in-transit services in New Zealand” Small said.
“ACM is projected to continue to suffer losses and we consider that ACM would likely exit the relevant markets in the short term.
“Given this, we are satisfied that there would not be a substantial loss of competition or material impact on the price and/or the quality of cash-in-transit services with the proposed acquisition.
“While not a relevant consideration to our decision to grant clearance for the proposed acquisition, we also considered that there were would likely be public benefits to the proposed acquisition. These include the ongoing stable supply of cash-in-transit services to the market and the orderly transition from two cash-in-transit providers to one, outcomes unlikely to be realised without this acquisition.”