Government ‘committed to cash’ as bank note distributor Armaguard faces fresh ACCC scrutiny

Armaguard is facing a new investigation by the competition watchdog, as it comes under intense scrutiny over its troubled monopoly on cash transportation around the country.

Armaguard has warned several times that the declining use of cash has made its business model unsustainable, raising serious concerns about people’s ability to access bank notes and coins if it were to fold.

Emergency talks in recent months led to an offer of an emergency $26 million financial bailout from the nation’s major banks and retailers to keep Armaguard afloat. The offer was ultimately rejected, with Armaguard’s parent company Linfox throwing it a temporary lifeline.

Now, the Australian Competition and Consumer Commission chair Gina Cass-Gottlieb has told a parliamentary hearing she is “considering the conduct” of Armaguard since it merged with its main rival Prosegur in September last year.

The ACCC is already monitoring Armaguard to ensure it is complying with the conditions attached to that merger, such as maintaining its distribution network and not increasing prices.

But the new process is in addition to that, with the ACCC using its broad remit to look at misuse of market power to scrutinise the cash transporter.

“We have also been considering the conduct that has occurred since September in terms of our general powers,” said Ms Cass-Gottlieb. 

ACCC approved merger

The ACCC-approved merger with Prosegur was supposed to put Armaguard on a sustainable footing with control of 90 per cent of the market.

But use of cash continues to plummet, with cash purchases falling from 60 per cent to just 13 per cent in a little over a decade.

While the volume of cash being used is tumbling, almost all Australians still use it occasionally and it is still needed everywhere around the country.

The ACCC had approved talks between Armaguard, the major banks, major retailers the Reserve Bank, Australia Post and the federal Treasury Department on how they can make the business of moving smaller amounts of cash around a financially sustainable business.