Pension fund administrators probe concluded
No anti-competitive conduct
The parties include Alexander Forbes Financial Services Namibia, Metropolitan, Old Mutual and Retirement Fund Solution.
An investigation into pension fund administrators for anti-competitive conduct by the Namibian Competition Commission (NaCC) were recently concluded and cleared them from any wrong doing.
The parties include Alexander Forbes Financial Services Namibia, Metropolitan, Old Mutual, and Retirement Fund Solution.
According to NaCC spokesperson Dina //Gowases in a media statement, the Commission’s investigation into the pension fund industry stems from an article published online on the 19th of October 2016, titled “Nature of Commercial Practices in the Namibian Pension Fund Administration Market.”
The article contained allegations that various pension fund administrators are cross-selling administration services tied with consulting and actuarial services and offered to umbrella pension funds as a conditional selling. This means that for an administrator to carry out administration services on behalf of the umbrella pension fund, the umbrella pension fund must accept consulting and actuarial services as part of the package, the statement reads.
The Commission’s investigation found that indeed, the pension fund administrators’ market is one that can be considered as an oligopolistic market.
Oligopoly refers to a market structure in which a small number of firms have the large majority of the market share, as opposed to a monopoly where one firm dominates the market. An oligopolistic market, however, does not per se lead to foreclosure of competition. On the allegations posed against the accused parties, the Commission’s investigation found that they have not contravened the relevant sections of the Competition Act.
This is due to the finding that the administrators and associated pension funds operate with the same common purpose, as a single economic unit, being vertically integrated with one another. As a result of this finding, the Commission is of the view that, the redress to alter these relationships will best be achieved through direct regulatory intervention by the industry regulator the Namibia Financial Institutions Supervisory Authority, if such authority is granted through legislation, such as the Financial Institutions and Markets Act.
The Commission wishes to emphasize that it reserves its rights to investigate any other potential anti-competitive behaviour in the pension fund market or by similar parties, in future.
The parties include Alexander Forbes Financial Services Namibia, Metropolitan, Old Mutual, and Retirement Fund Solution.
According to NaCC spokesperson Dina //Gowases in a media statement, the Commission’s investigation into the pension fund industry stems from an article published online on the 19th of October 2016, titled “Nature of Commercial Practices in the Namibian Pension Fund Administration Market.”
The article contained allegations that various pension fund administrators are cross-selling administration services tied with consulting and actuarial services and offered to umbrella pension funds as a conditional selling. This means that for an administrator to carry out administration services on behalf of the umbrella pension fund, the umbrella pension fund must accept consulting and actuarial services as part of the package, the statement reads.
The Commission’s investigation found that indeed, the pension fund administrators’ market is one that can be considered as an oligopolistic market.
Oligopoly refers to a market structure in which a small number of firms have the large majority of the market share, as opposed to a monopoly where one firm dominates the market. An oligopolistic market, however, does not per se lead to foreclosure of competition. On the allegations posed against the accused parties, the Commission’s investigation found that they have not contravened the relevant sections of the Competition Act.
This is due to the finding that the administrators and associated pension funds operate with the same common purpose, as a single economic unit, being vertically integrated with one another. As a result of this finding, the Commission is of the view that, the redress to alter these relationships will best be achieved through direct regulatory intervention by the industry regulator the Namibia Financial Institutions Supervisory Authority, if such authority is granted through legislation, such as the Financial Institutions and Markets Act.
The Commission wishes to emphasize that it reserves its rights to investigate any other potential anti-competitive behaviour in the pension fund market or by similar parties, in future.
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