National Australia Bank's takeover of AXA Asia Pacific was recently scuppered by a ruling from the Australian Competition and Consumer Commission - but in the light of an earlier decision, the deal may not be dead in the water just yet.

At the end of the day, the Australian competition regulator’s decision to veto NAB’s A$14 billion (around $12.9 billion) takeover of AXA Asia Pacific was not about customers or revenue or market capitalisation. It came down to the battle of the investment platforms.

This was the justification the Australian Competition and Consumer Commission used in deciding against the NAB bid, which had been agreed by the AXA board.

It is a decision which leaves under-bidder AMP in the box seat to re-pitch its lower offer, and – more widely – gives AMP a crucial chance to become a “Fifth Pillar” in the Australian financial services sector alongside the dominant Big Four banks. If the NAB bid had been green-lighted, AMP would have been well back in the pack and would itself have come under consideration as a takeover target.

One of the features of the Australian wealth management market is the prevalence of competing investment platforms used by the different groups and marketed to the financial advisory community.

These investment administration systems give advisors and investors access to – on average – 30 or 40 difference master trusts and a choice of 100 or more fund managers in addition to performing administration tasks. The platform industry in Australia peaked at around A$425 billion in funds under management before the financial crisis, and is creeping up again to be worth just under A$400 million.

When NAB bought Aviva’s Australian business last June for A$825 million a key component of that purchase was Aviva’s investment platform Navigator, which while not the largest was recently named as the best platform in Australia by market research group Investment Trends.

The ACCC’s view was that a combination of the Navigator platform plus AXA’s newly developed North platform would give NAB dominance in the platform market and stifle innovation and further competition.

“At the heart of the decision are concerns about innovation and, as a consequence, future rigorous and effective competition between retail investment platforms,” the ACCC said in its statement.

In a subsequent interview, ACCC chief Graeme Samuel pointed out that a NAB/AXA merger would give the bank a technological edge in funds management and “remove the drive, the incentive for competition and innovation, and that would have substantially lessened competition in the market.”

Unsurprisingly, NAB is challenging the decision. There has been talk that it would sell off several of AXA’s platforms – it has several – and even lease them back again if that meant it could clear the competition hurdles that have arisen.

This is what rival AMP does: it does not own its own platform technology but rather leases it from other providers.

The AXA ruling, as many have pointed out, is somewhat inconsistent with an earlier ACCC decision which allowed the A$18 merger between Westpac and St George banks to go ahead in 2008. That merger brought together the BT Wrap and Asgard platforms to create the dominant provider in the market.

Then, the ACCC's explanation was entirely different. “Further market inquiries have since revealed that there are a range of substitutable products, including master trust platforms and increasingly, separately-managed accounts, available to financial planning businesses and investors,” the Commission said at that time.

It is a contradiction which gives hope to NAB, and means there is still some life in its AXA bid even yet.