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The Australian Competition and Consumer Commission (ACCC) has announced it will not oppose Experian Australia Credit Services Pty Ltd’s acquisition of Credit Data Solutions Pty Ltd (illion).
Both companies offer consumer credit reporting services in Australia and provide additional services such as credit decisioning software, marketing solutions, categorisation services, and identity verification.
“While the proposed merger is between two of the three consumer credit bureaus, 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,” ACCC commissioner Liza Carver said.
“This lack of competitive constraint is a result of factors particular to consumer credit reporting and to the entrenched position of Equifax.”
The ACCC found that the majority of credit providers rely on a single credit bureau, with Equifax being the predominant choice. Even when large credit providers use multiple bureaus, Equifax is often the primary bureau, with Experian and illion serving as secondary sources.
“There are strong network effects in this industry, as customers tend to direct more inquiries to their primary bureau, which in turn allows the bureau to obtain more inquiry data, allowing the bureau to further cement its position in the market,” Carver said.
Credit providers are typically required to share data only with bureaus they have agreements with. Thus, bureaus with more agreements have greater access to data, leading to more detailed credit reports.
The ACCC’s review indicated that Experian’s and illion’s datasets are less comprehensive than Equifax’s, which diminishes their competitive constraint. However, the merger could have a pro-competitive effect by enabling the combined Experian-illion entity to offer a more attractive service due to its expanded 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.
“Without the merger, and given their lack of scale and access to a large, high-quality comprehensive dataset, it is difficult to see how Experian or illion could, by operating separately, materially expand their individual service offerings to compete more effectively with Equifax for primary bureau status.”
The review also considered whether the acquisition would substantially lessen competition in the supply of credit decisioning solutions, which are software tools that support credit risk assessments during the application phase.
Additionally, the ACCC assessed the potential impact on the sale of credit header data, a key input for 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 consulted with a broad range of market participants, including large and small credit providers across banking, non-banking, auto finance, telecommunications, utilities, and ancillary service providers.
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