Commonwealth Bank has received regulatory approval to swallow Aussie Home Loans, despite expectations the deal could make the mortgage broking market slightly less competitive.
The Australian Competition and Consumer Competition on Thursday said it would not challenge CBA's plan to increase its stake in Aussie to 80 per cent, with the option to buy the whole company by 2018.
In the 1990s, Aussie promoted itself as a mortgage broker that was fiercely independent of the big four lenders.
Now, however, ACCC chairman Rod Sims said the commission had assumed CBA would increase the number of "white-label" Aussie-branded loan products sold through Aussie's network of 750 brokers. While he said this could decrease competition, it did not meet the ACCC's threshold of a "substantial" lessening.
As brokers depended on offering customers a wide range of products, he said Aussie would still need to offer customers products aside from Commonwealth Bank loans.
There were also many other channels for lenders to reach borrowers, and Aussie only had a market share of about 6 per cent.
"Aussie's not going to cut its own throat by not selling other products, but it would be naive to think the Commonwealth does not have influence," Mr Sims said.
"We accept that this is a lessening of competition. The judgment we have to provide is: is it a substantial lessening of competition and we would say clearly not a substantial lessening."
CBA now writes one in every four home loans in the country and consumer group Choice and some smaller lenders had voiced concerns about the deal.
Aussie's founder, John Symond, has argued the purchase will allow the business to grow and be a bigger competitive force.
A bank spokesman said it was pleased with the decision and would lift its investment in the broker.