A merged AMP/AXA would not unfairly distort New Zealand’s rapidly growing KiwiSaver market, the country’s competition regulator ruled yesterday, despite the fact both providers enjoyed default scheme status.

Under the KiwiSaver rules, members who were automatically enrolled or who declined to select a scheme, were allocated to one of the six default providers.

Currently, about half of all new members are assigned to default schemes, giving AMP/AXA a theoretical advantage in attracting “mandated contributions”, the New Zealand Commerce Commission said.

However, the Commission said both institutions found it difficult to hang on to KiwiSaver members entering through their default schemes with attrition rates high.

“AMP and AXA advised that they each were losing a significant number of those that are enrolled in their KiwiSaver schemes via the default path,” the Commerce Commission said in the ruling.

Collectively, AMP and AXA manage over $1 billion of KiwiSaver money on behalf of more than 200,000 members. According to the New Zealand tax department, just over 1.4 million members have signed up to KiwiSaver schemes with total funds under management now topping NZ$4.5 billion.

KiwiSaver is now responsible for most of the growth in New Zealand’s retail funds management sector with over 40 providers vying for a piece of the action.

The Commerce Commission also found a combined AMP/AXA in New Zealand would not stymie competition in any of the sectors it considered including wealth management, insurance, financial advice as well as retail and wholesale funds management.

A source close to the deal said it was curious the Commerce Commission had issued a ruling when no accepted AMP offer was on the table.

“Will the Commerce Commission have to go through the process again if a real AMP offer is accepted,” the source said.

In its ruling, the Commission also indicated any rival offer from National Australia Bank, which owns the Bank of New Zealand, would not be rejected on competition grounds.

“If NAB/BNZ were to acquire AXA, there would be only a minimal degree of aggregation of market share in any of the relevant markets. Therefore, the Commission considers that such an acquisition would be essentially the same as the status quo counterfactual in respect of competition effects.”

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