ACCC clears IOOF acquisition of MLC

The competition regulator will not oppose IOOF’s acquisition of MLC from the NAB, but the deal still requires APRA approval.

IOOF chief executive Renato Mota. The ACCC has give IOOF the green light to acquire MLC. Stuart McEvoy/The Australian.

IOOF is a step closer to scooping up National Australia Bank’s MLC wealth division after the competition regulator gave the acquisition the go-ahead, saying the deal would be unlikely to substantially lessen competition in the sector.

Following a review of the proposed $1.44bn acquisition, the ACCC found that even after the transaction is completed IOOF will compete with both large and small firms for the supply of retail platforms, and will compete with super funds for the supply of corporate platforms for superannuation and other retirement income.

“Transactions that combine two major firms in a sector will attract close scrutiny from the ACCC,” ACCC commissioner Stephen Ridgeway said.

“However, feedback from customers, financial advisers and other industry participants suggested that this deal would not be likely to substantially lessen competition.”

On the financial advice side, the ACCC said the information it had received indicated that IOOF would have a market share of just 10 per cent after the acquisition.

The advice market will remain highly fragmented and the merged IOOF-MLC entity will face competition from peer AMP, as well as other smaller firms, the ACCC said.

“Despite the profile and size of this transaction, it does not raise concerns under section 50 of the Competition and Consumer Act largely due to the fragmented nature of most of the relevant markets and strong constraints from remaining competitors,” Mr Ridgeway said.

IOOF chief executive Renato Mota said the ACCC’s decision was “a key milestone” in achieving the necessary approvals to complete the deal.

“MLC is a highly complementary wealth management business which is a natural fit with IOOF.

“It presents a unique opportunity to create Australia’s leading wealth manager along with significant benefits through simplification and transformation for clients, members and shareholders,” he said.

Combining IOOF and MLC would create a common purpose and culture of community spirit while supporting people to achieve their financial goals, he added.

“This combination brings wide-ranging capabilities, technical expertise to enable improved choice, accessibility and client outcomes.”

The ACCC’s move to green light the transaction brings IOOF a step closer to completing the deal, with approval still to come from the prudential regulator.

IOOF still expects to get the deal done by June 30 next year.