The competition watchdog will allow US logistics giant Iron Mountain's proposed $3.4 billion takeover of data management group Recall, after Iron Mountain agreed to sell most of its Australian business.
Recall is currently Iron Mountain's closest competitor for physical document storage.
The Australian Competition and Consumer Commission (ACCC) had significant concerns the proposed acquisition would likely have substantially lessened competition, without Iron Mountain's undertaking to offload its local operations.
"By combining these two companies, the proposed acquisition could have left customers vulnerable to price increases or reduced service levels in a market where there are high costs to switch providers," ACCC chairman Rod Sims said.
Iron Mountain has undertaken to sell its entire Australian business except for its local records management customers in the Northern Territory and its data protection business.
Iron Mountain has operations in every state and territory in Australia, and Recall operates in all states and territories except for the Northern Territory.
Competition authorities in the US, UK and Canada are also considering Iron Mountain's proposal to take over Recall.
"Iron Mountain continues to expect the transaction to result in meaningful synergies and accretion," the company said.
"Regulatory review and approval is a normal part of the acquisition process, and as previously disclosed, Iron Mountain has agreed to make certain divestments, if required to address competition issues including divestments of certain assets, among other possible remedies."
Recall's board has unanimously endorsed the Iron Mountain offer in the absence of a superior proposal, and shareholders are due to meet on April 19 to consider the takeover.
Iron Mountain expects to close its acquisition of Recall on May 2.
Shares in Recall gained 14 cents, or 1.9 per cent, to $7.50.
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