ACCC concerned about ANZ’s access to business data in mooted $4bn MYOB takeover

The Australian Competition and Consumer Commission is expected to probe the ramifications of ANZ accessing business data housed within its target, MYOB.

Regulators are preparing to probe ANZ’s mooted $4bn-plus MYOB deal due to concerns about data use and the creation of a business that could impede competition in small business and other loans.

The Australian Competition and Consumer Commission is concerned about one of the country’s major banks getting its hands on extensive business data housed within MYOB, which provides services such as accounting software, sources said.

The regulator has preliminary concerns about the deal, centring on data control and access.

That was also the key issue of the Australian Competition and Consumer Commission in its dispute with Google and Meta — the owner of Facebook: there was fear about market power and a so-called conglomerate effect, those sources said.

MYOB chief executive Greg Ellis, whose company is in talks with the ANZ.

The appeal of MYOB to ANZ includes access to accounting firms’ customer accounts, helping it operate a better service for business borrowers with almost live, cash flow-based deals.

Access to accounting firms’ books also gives ANZ information on who banks with whom — an advantage as it vies with its larger rivals for market share.

Data access has been on the ACCC’s radar for some years, particularly in its assessments of mergers and acquisitions.

In 2018 the regulator demanded open data rights to clear a Transurban-led bid to buy a majority interest in the WestConnex motorway in NSW.

The toll road giant provided an undertaking to publish toll, traffic and other data, so competitors could get access to the latest traffic statistics on Sydney roads.

Despite preliminary concerns, it is not clear whether the ACCC will block ANZ’s purchase of MYOB.

If a transaction proceeds, the regulator will hold a public review of the deal.

Sources said ANZ had already raised the prospect of the MYOB deal with the ACCC, but had not yet formally sought clearance.

On Thursday, a bank spokesman declined to comment on any ACCC engagement. ANZ confirmed on Wednesday that it was negotiating with private equity group KKR to acquire the Greg Ellis-run MYOB.

ANZ’s shares fell 2.2 per cent on Thursday to $21.93, on top of a 1.2 per cent drop a day earlier.

While the ANZ is keen to snap up MYOB, industry experts are not convinced it’s a good idea. Picture: John Gass

The $4bn-plus deal underscores ANZ’s attempt to get back into the race for small business customers, where it lags National Australia Bank and the Commonwealth Bank.

But the transaction, which may be announced in coming days, has already stoked concerns from investors and analysts over ANZ’s strategy, and the risks associated with a move into the technology business.

MYOB is only one of a handful of notable small business accounting firms, but it has just 20 per cent market share, compared with market leader Xero’s 60 per cent share.

CLSA equities analyst Ed Henning — who has an outperform rating on ANZ — said the MYOB transaction could help the bank to grow its commercial customer relationships and provide lending opportunities in areas such as working capital.

But Mr Henning questioned the price being touted and the risks involved for banks wading into technology businesses.

“We question whether an acquisition is the optimal way to pursue its strategy, given the risks involved,” Mr Henning said.

“The banking sector as a whole is not great at technology, generally overspending on technology projects.

“We fear that this acquisition could represent just another avenue for increased costs, if mismanaged.

The original number plate of MYOB founder Craig Winkler, who later went on to lead MYOB’s biggest rival, Xero.

“Further, in our view, bringing MYOB within the ANZ group could risk diluting the core focus of the MYOB product.

“While MYOB may have improved under private equity ownership, there is a question on the investment made and capex required going forward.

“We are about to head into an economic downturn; is this the right time to be buying an SME software business out of private equity’s hands?”

Barrenjoey analyst Jon Mott said he did not see the “strategic requirement” for ANZ to acquire MYOB.

“ANZ has significant challenges in its core businesses such as building and rolling out its new retail platform ANZx, managing a rapidly deteriorating environment in NZ, and the impact of rapid rate rises in Australia,” Mr Mott said.

He said if ANZ’s proposed non-operating holding company structure were approved, the MYOB purchase could be leveraged, meaning the bank would avoid diluting shareholders through a capital raising.