The ACCC has issued a Statement of Issues regarding Link's proposed acquisition of Pillar, expressing concern that it will substantially lessen competition in superannuation administration services. Link and Pillar are currently the only two providers that service larger funds. The acquisition would remove Pillar as the only alternative to Link for larger funds and reduce competitive constraints. The ACCC is seeking further information from interested parties on competition issues and barriers to entry by 28 October, with an expected final decision by 15 December.

1. ACCC RELEASES SOI ON PROPOSED ACQUISITION OF PILLAR BY
LINK
The Australian Competition and Consumer Commission has issued a Statement of
Issues on the possible acquisition of the Superannuation Administration Corporation
(trading as Pillar) by Link Administration Holdings Limited (ASX:LNK) (Link). Pillar is
being privatised by the NSW Government.
“The ACCC is concerned that the possible acquisition is likely to substantially lessen
competition in the supply of superannuation administration services by entrenching
Link’s dominant position, resulting in lower service levels or higher prices, which will
ultimately be passed on to fund members,” ACCC Chairman Rod Sims said.
Link and Pillar both supply administration services to superannuation funds in
Australia. They are the only two providers that currently service larger funds.
“The ACCC is concerned that the possible acquisition will remove the only alternative
superannuation administration services provider with the demonstrated capacity to
supply administration services to larger funds in competition with Link. Consequently,
there would be one dominant administration provider facing limited competitive
constraint in the outsourced market,” Mr Sims said.
“It would also remove the potential for an alternative owner to further invest in Pillar’s
offering and make it an even stronger competitor to Link in the future.”
The ACCC is seeking to better understand the barriers to entry or expansion and the
likelihood of new entry or expansion in the sector. Other issues include the extent to
which insourcing superannuation administration services is a credible constraint on
Link and the likelihood of self-administered funds providing administration services to
other funds.
“The ACCC’s preliminary view is that a fund that currently outsources superannuation
administration services is unlikely to switch to insourcing as a way of bypassing Link;
it would be too costly and difficult,” Mr Sims said.
“The ACCC also considers that funds are unlikely to provide superannuation
administration services to each other in a way that competitively constrains Link. It is
beyond the remit of most funds to sell administration services, and, furthermore,
many funds are likely to be reluctant to purchase administration services from their
competitors.”
The Statement of Issues seeks further information on the competition issues which
have arisen from the ACCC’s market inquiries to date. The ACCC invites further
submissions from interested parties by 28 October 2016. The ACCC’s expected final
decision date is 15 December 2016.
The Statement of Issues is available on the public register.

2. Background
The NSW Government has announced that it intends to privatise Pillar, and has
commenced a competitive sale process. Link is one party who has expressed an
interest in acquiring Pillar.
Link is the largest provider of services in Australia's fund administration industry,
providing services to over 10 million superannuation member accounts through its
businesses Link Super and Australian Administration Services. Link has its own
proprietary IT platform (the aaspire platform), which it uses for the provision of
administration services for most of its clients.
Pillar is a NSW state-owned corporation that provides administration services mainly
to Government superannuation funds, pension funds, and defined benefit schemes.
Pillar administers more than 1.1 million superannuation member accounts, with
assets totalling more than $100 billion. Pillar does not have its own proprietary IT
administration platform and uses a number of IT platforms licensed from third parties.
Media enquiries
ACCC Media 1300 138 917
MR 186/16
13 October 2016