The competition watchdog has cleared a shareholder of iSelect Ltd (ASX: ISU) of any wrongdoing in attempting to buy up more stock.
In November, the Australian Competition and Consumer Commission (ACCC) started investigating the activities of iSelect shareholder Innovation Holdings Australia (IHA).
The potential problem was that IHA, via a complex web of entities, also owns CompareTheMarket.com.au, which provides similar services to iSelect.
Both brands are rivals in the competitive comparison site sector, allowing Australians to contrast different energy, insurance and financial services providers.
IHA had already bought up 29% of iSelect shares over 2 years without notifying the ACCC. The watchdog was prompted into action after it was tipped off about an additional 6% purchase.
ACCC commissioner Stephen Ridgeway said at the time that such arrangements could “give rise to competition concerns”.
‘Unlikely to substantially lessen competition’
In good news for IHA and current iSelect shareholders, the ACCC on Thursday announced it would not oppose the 6% buyup.
The commission concluded that a 35% stake would be “unlikely to substantially lessen competition” in the comparison site market.
“Other routes to market exist for providers – including other comparison websites,” Ridgeway said on Thursday.
“There are also government websites available to consumers such as www.energymadeeasy.gov.au and www.privatehealth.gov.au.”
The iSelect share price is up 5.45% at the time of writing, trading for 29 cents.
iSelect owns the comparison engines iselect.com.au and energywatch.com.au. IHA is associated with the insurance brand Budget Direct, as well as the CompareTheMarket.com.au site.
When the ACCC investigation first started in November, a CompareTheMarket (CTM) spokesperson denied that it was owned by IHA.
“CTM is owned by Financial Holdings Australia (FHA), which has shareholders in common with IHA, but the two are separate entities,” she told The Motley Fool.
“The group structure is convoluted, but while Compare the Market and Innovation Holdings Australia share common investors, it is not accurate to state that CTM acquired shares in iSelect.”
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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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