The Commerce Commission has cleared the merger of the New Zealand businesses of Commonwealth Bank of Australia Group (CBA) with those of Colonial Limited.
Commission Chair John Belgrave said that the Commission was satisfied that the proposed merger would not result in any party acquiring or strengthening a dominant position in any New Zealand market.
The proposal is the New Zealand arm of CBA's planned acquisition in Australia of all the shares in Colonial.
In New Zealand, CBA owns 75 percent of the ASB Group, which in turn owns ASB Bank Limited, ASB Life Assurance Limited, Sovereign Assurance Company Limited and Metropolitan Life Assurance Company of New Zealand Limited.
Colonial trades in New Zealand as Colonial New Zealand, Colonial First State Investment Managers (NZ) Limited and Jacques Martin New Zealand Limited, offering a range of insurance and investment services.
The principal New Zealand markets in which there would be some aggregation of market power are those for:
life insurance
managed funds including superannuation, and
investment administration services.
The Commission was satisfied that, in all three markets, competition from existing competitors and the ease of new entry to the markets would constrain a merged CBA/Colonial.
In the markets for life insurance and managed funds, a merged CBA/Colonial would be within the Commission's "safe harbours". The safe harbours are:
40 percent market share, and
60 percent market share if at least one competitor has 15 percent or more of the market.
Comprehensive figures on the size of the investment administration services market were not available. Other providers in this market include New Zealand Funds Management Limited, Tower Trust and Ausmaq (NZ) Limited.
Background
The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any markets.
Parties can apply for a clearance, which the Commission will grant if it is satisfied that dominance is not acquired or strengthened. A clearance, if granted, protects an acquisition from court action under the Act.
Public copies of the Commission's decision are available from reception at its Wellington office, Level 7 Landcorp House, 101 Lambton Quay.
