Regulator cites limited impact on competition
The Australian Competition and Consumer Commission (ACCC) has announced it will not oppose the acquisition of Credit Data Solutions (illion) by Experian Australia Credit Services (Experian).
Both Experian and illion are providers of consumer credit reporting services in Australia, alongside other offerings such as credit decisioning software, marketing services, categorisation solutions, and identity verification services.
“While the proposed merger is between two of the three consumer credit bureaux, our investigations indicate that Experian and illion provide only a weak competitive constraint against the market leader Equifax, and this is unlikely to change if the merger does not go ahead,” said ACCC commissioner Liza Carver. “This lack of competitive constraint is a result of factors particular to consumer credit reporting and to the entrenched position of Equifax.”
The ACCC’s investigation found that most credit providers in Australia use a single credit bureau, typically favouring Equifax. Even among large credit providers who contract with multiple bureaux, Equifax is generally regarded as the primary bureau, with Experian and illion used as secondary data sources.
“There are strong network effects in this industry, as customers tend to direct more enquiries to their primary bureau, which in turn allows the bureau to obtain more enquiry data, allowing the bureau to further cement its position in the market,” Carver said.
The review also noted that the datasets of Experian and illion are less comprehensive than those of Equifax, reducing their ability to compete effectively. The ACCC suggested that the merger could have a pro-competitive effect by enabling the combined Experian-illion to offer a more attractive service with enhanced credit data.
“We concluded that the merger is unlikely to lessen competition and may actually provide a greater competitive constraint on Equifax than if the two players continued to operate alone,” Carver said.
The ACCC also examined whether the merger would lessen competition in the market for credit decisioning solutions — software tools used by credit providers to assess risk during the application process. Additionally, the commission considered the potential impact on the supply of credit header data, a key component in identity verification services.
“After carefully examining these services affected by the proposed acquisition, we concluded there would be no substantial lessening of competition,” Carver said.
The ACCC’s decision followed consultations with a range of market participants, including large and small credit providers across sectors such as banking, non-banking, auto finance, telecommunications, and utilities, as well as ancillary service providers.
Brian Cassin (pictured above left), chief executive of Experian, announced in April the agreement to acquire illion – led by CEO John Banfield (pictured above right) – in an effort to “enhance the competitive dynamics in this important market.”
“This marks a pivotal step in our longstanding commitment to the region and reinforces our dedication to delivering exceptional value and more choice to clients in Australia and New Zealand,” Cassin said.
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