The ACCC has released a statement of preliminary views regarding Armaguard and Prosegur’s application to the ACCC for merger authorisation.
Armaguard and Prosegur are the two largest suppliers of cash-in-transit services in Australia and the only suppliers with significant national networks. Cash-in-transit services include cash transport, management and processing services and are predominantly provided to banks and retailers.
Armaguard and Prosegur have sought ACCC authorisation for the merger of their cash-in-transit, ATM device monitoring and maintenance and ATM businesses in Australia.
The parties submitted to the ACCC that high fixed costs for providing cash-in-transit services and declining cash use mean that neither is able to operate a financially viable business providing cash-related services and that without the merger one of them is very likely to cease supplying cash-in-transit services.
“We have set out our preliminary views about key issues with regard to the merger authorisation application from Armaguard and Prosegur. We are seeking stakeholders’ views on the merger’s potential effects on competition and potential public benefits and detriments,” ACCC Commissioner Liza Carver said.
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“Some stakeholders have expressed concerns that given the lack of viable alternatives to Armaguard and Prosegur, the merger will reduce competition and lead to increased prices and reduced service levels.”
“While the ACCC considers there is a clear reduction in competition if Armaguard and Prosegur merge, the critical question is whether a reduction in competition would also soon occur without the transaction,” Ms Carver said.
The ACCC is also carefully considering the implications of the decline in cash use on Armaguard and Prosegur’s cash-in-transit businesses and their argument that ongoing competition between them is not sustainable.
The Reserve Bank of Australia has noted that the decline in the volume of banknotes is placing significant financial pressure on industry participants.
“Despite cash use decreasing since COVID-19, cash remains an important payment method for some members of the community, including older Australians, vulnerable Australians and Australians living in regional and remote areas,” Ms Carver said.
“We are interested in stakeholders’ views on how the proposed merger potential will affect these communities.”
“The ACCC can only grant authorisation if it is satisfied in all circumstances that there is either not a likely substantial lessening of competition, or that there is likely to be public benefits that outweigh any public detriments,” Ms Carver said.
The ACCC’s final decision on whether to grant authorisation to Armaguard and Prosegur will likely be announced in late March, 2023.