In making its decision, the competition watchdog has accepted a court enforceable undertaking from Perpetual to divest The Trust Company’s existing ownership of a 13.4 per cent shareholding in competitor Equity Trustees.
ACCC chairman Rod Sims said the acquisition would be unlikely to lead to a substantial lessening of competition in “any relevant market”.
“The nature of this industry means that there is debate over the best way to measure market shares. In particular, the use of ‘funds under management’ does not produce reliable estimates of market shares; it reflects the size of the underlying transactions and the clients being served by the trust service provider, not fee revenue earned or some other more reliable measure of market share,” Mr Sims said.
Publicly available estimates of market share do not differentiate between the different types of trust services, said Mr Sims – although the ACCC’s inquiries have confirmed that the positions of the various competitors in the space “vary considerably” by service type.
“Nevertheless, the ACCC considers that a merged Perpetual and The Trust Company will be the largest provider of trust services in Australia,” said Mr Sims.
The merged entity will still be constrained by continuing competition from other suppliers, the threat of entry by new competitors and the expansion of existing competitors, he said.
In addition, many corporate customers are able to provide some of the relevant services in-house, or will be able to sponsor a new entrant to the market, said Mr Sims
“Since releasing a Statement of Issues on 1 August 2013, the ACCC has engaged in extensive market inquiries to obtain further information, including contacting a large number of customers of trust services. The vast majority of those customers expressed no concerns about the proposed acquisition,” said Mr Sims.
The ACCC will issue a competition assessment “in due course”, the commission said.
