Watchdog Greenlights NAB’s Citi Acquisition in Australia
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The acquisition «would not substantially lessen competition,» the Australian Competition and Consumer Commission (ACCC) said on Thursday.
The competition watchdog in Australia will not oppose the proposed acquisition of Citigroup Australia’s consumer business by National Australia Bank.
Its review focused on competition in the supply of credit cards, as Citi is a substantial provider of credit cards and credit card services. ACCC also focused on was the provision of «white label» credit card services, as following the acquisition, NAB will be the dominant white label credit card supplier to a number of commercial partners, and will compete with those partners in the consumer-facing credit card market.
Evidence showed that the proposed acquisition was unlikely to raise competition concerns in any other areas of overlap, given Citi’s minimal market share in these markets, ACCC said in a statement.
NAB, Australia’s second-biggest bank, said in August it would buy Citigroup Australia in a deal valued at around A$1.2 billion ($880 million).
The U.S. bank is preparing to exit the region in the face of strong challenges to the old credit card business model from buy-now, pay-later companies.
Questions & Answers
Q.Which specific areas of competition did the ACCC review for this acquisition?
Which specific areas of competition did the ACCC review for this acquisition?
The ACCC's review focused on competition in the supply of credit cards, as well as the provision of 'white label' credit card services. These were the primary areas of concern due to Citi's significant role.
Q.What was the ACCC's main concern regarding 'white label' credit card services?
What was the ACCC's main concern regarding 'white label' credit card services?
The ACCC was concerned that NAB would become the dominant 'white label' credit card supplier after the acquisition. This could lead to NAB competing with its own commercial partners in the consumer credit card market.
Q.Why did the ACCC not have concerns about other areas of overlap between the two banks?
Why did the ACCC not have concerns about other areas of overlap between the two banks?
The ACCC found that the proposed acquisition was unlikely to raise competition concerns in other areas. This was because Citigroup's market share in those specific markets was minimal.
Q.Why is Citigroup Australia exiting the region?
Why is Citigroup Australia exiting the region?
Citigroup is preparing to exit the region due to strong challenges facing the old credit card business model. These challenges are primarily coming from new buy-now, pay-later companies.
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