By SHIRLEY MAULUDU
THE Independent Consumer and Competition Commission (ICCC) has rejected an application by Kina Securities Ltd to acquire the Westpac PNG Ltd (Westpac).
ICCC commissioner and chief executive officer Paulus Ain confirmed this yesterday after going through processes under the ICCC Act.
Kina Securities had filed the application on March 17 to buy 89.91 per cent of Westpac.
“The outcomes and the findings were based on financial information provided and gathered by the ICCC,” he said.
“The ICCC has now made the final determination to decline the authorisation sought by Kina Bank.”
He said that although Kina Securities had proposed to operate Westpac as a separate bank, the ICCC was not satisfied that there would be two separate banks, because of a common ownership.
Other reasons given include:
- THE markets are currently highly concentrated, and will remain so as long as there are few players in the markets;
- THE number of commercial banks would be reduced to two with the acquisition;
- THE barriers to entry and expansion are very high and the proposed acquisition would further heighten the barriers to entry as number of banks are reduced giving more market power to the two existing incumbents.
“The ICCC is concerned that the proposed acquisition is likely to result in prices and profit margins increase,” he said.
“Although Westpac has decided to divest its PNG business, it appeared that this would not immediately happen without the proposed acquisition proceeding.
“Hence the ICCC considered that Westpac PNG would not be a significant source of competition for at least several years.”
Attempts were made to get comments from Kina Securities and Westpac yesterday.