DNB Bank’s acquisition of domestic rival Sbanken has hit a regulatory roadblock after the Norwegian Competition Authority (NCA) decided to block the proposed deal.
The competition authority stated that “the acquisition will weaken competition in the market for mutual funds. This may lead to higher prices and harm consumers who invest in such funds.”
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Notably, the proposed $1.28bn acquisition has secured approval from boards of both the banks, the country’s banking regulator, the finance ministry, and Sbanken’s shareholders.
Following its preliminary assessment, the NCA notified the parties about the objection in August 2021. Later, in October DNB and Sbanken submitted a proposal for remedies to rescue the deal.
However, the NCA feels that “neither the companies’ responses to the Authority’s concerns nor DNB’s proposals for remedies have changed the Authority’s assessment that DNB’s acquisition of Sbanken will weaken competition and harm bank customers who wish to invest in mutual funds.”
DNB already owns a 9.9% stake in the lender and the acquisition would have increased its shareholding in the lender to 90.9%.
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By GlobalDataThe authority noted that “DNB is already the largest player in the market for mutual funds, and the acquisition of Sbanken would have strengthened DNB’s position even further.”
As per Reuters’ report, DNB chief executive Kjerstin Braathen disagreed with the NCA and stated that fund management was only a small part of Sbanken’s operations.
“The market is developing rapidly and it’s easy for new players to enter the market. The NCA appears to be looking backwards when evaluating this, rather than at the market as it is today,” Braathen was quoted by the publication as saying.
DNB might appeal against the decision to the Norwegian Competition Tribunal, which would have up to six months to decide on the issue.
