The country’s consumer watchdog has moved to block a potential buyer of Pillar Administration, citing its acquisition of the state-owned superannuation service provider would “significantly lessen competition”.
Link Administration Holdings Limited flagged an interest in taking over Pillar, which bases most of its 700 employees in an office at Coniston, in August.
The Australian Competition and Consumer Commission (ACCC) this week issued its preliminary report on potential issues arising from Link’s proposed bid.
ACCC chairman Rod Sims said Link and Pillar were the only superannuation administration providers currently servicing larger funds.
“The ACCC is concerned that the possible acquisition is likely to substantially lessen competition in the supply of superannuation administration services by entrenching Link’s dominant position, resulting in lower service levels or higher prices, which will ultimately be passed on to fund members,” Mr Sims said.
The watchdog said a Link acquisition would “remove the only alternative superannuation administration services provider” and “one dominant administration provider would face limited competitive constraint in the outsourced market”.
“It would also remove the potential for an alternative owner to further invest in Pillar’s offering and make it an even stronger competitor to Link in the future,” he said.
The ACCC is yet to make an official ruling and has called for submissions on Link’s proposed acquisition by October 28. A determination is expected in December.
Link said it was reviewing the ACCC’s statement of issues.
“Link Group has a compelling proposition for the State of NSW which would fully address the requirements of the enabling legislation and the sale process,” the company said.
The NSW government announced its plan to privatise Pillar in December, with legislation to enable the sale passing the State Parliament earlier this year.
In May, Treasurer Gladys Berejiklian announced Pillar’s sale included a guarantee that any new owner would have to maintain its operations in the Illawarra for at least 10 years.
On Friday, Ms Berejiklian said bidders in all government transactions must seek relevant regulatory approvals, such as those from the ACCC.
“There is strong market interest for Pillar and the transaction remains on track,” she said.
“As the government has said previously, the Pillar transaction is expected to be completed in the second half of this year and that remains the case.”