The ACCC has granted authorisation to a proposed merger of Linfox Armaguard and Prosegur Australia, the two biggest cash-in transit service providers in the country.

Aside from transporting cash between banks and independent ATM operators, the two are responsible for the collection of cash from numerous Australian retailers, including Harvey Norman, and Bunnings.

Following completion of the merger, Linfox would hold 65 per cent and Prosegur would hold 35 per cent of a merged Armaguard.

“After conducting an extensive review of the transaction,” ACCC Commissioner Liza Carver said.

“We were not satisfied that the proposed merger would not substantially lessen competition. However, we are satisfied that, provided the parties comply with the undertaking, the proposed merger is likely to result in a public benefit that would outweigh the likely public detriment.”

The ACCC’s review found that the cash-in-transit industry is in structural decline due to the decreasing use of cash as a payment method.

“We accepted that, without the proposed merger, it was highly probable either Armaguard or Prosegur would withdraw from the declining cash-in-transit market in the near future and this exit could occur very quickly,” Carver said.

“We were concerned that the rapid exit by either of these two major suppliers could cause significant disruption, including by reducing the availability of cash to their customers, and therefore the public.

“The ACCC concluded that the merger lessens some of the likely harms caused by the potential disorderly exit of one of the parties, and allows for a smoother transition to one provider, including by maintaining adequate access to cash.”

An undertaking, effective for the next three years, means the combined Armaguard-Prosegur will be required to continue offering cash-in-transit services to all locations that are currently serviced, and cannot reduce service levels or raise prices for existing customers. It also sets minimum terms and pricing constraints for new customers.

“While the undertaking allows prices to be increased within limits over the next three years, this is against a backdrop of a declining industry with current loss-making prices,” the ACCC notes.