The proposed involved selling off AXA's North platform administration business to IOOF Holdings, after antitrust authorities flagged the deal as a threat to completion in the "relevant retail investment platform market.
"The proposed undertakings offer by the parties do not provide sufficient certainty that the ACCC's competition concerns will be addressed," the commission's deputy chairman Peter Kell said.
"The undertakings as proposed place a heavy reliance on IOOF having sufficient distribution capability to provide an effective competition constraint upon existing key players in the foreseeable future."
The decision comes nine months after NAB first made a A$13 billion offer for AXA, trumping a A$12 billion offer from financial services provider AMP.
ACCC said it consulted with a wide range of industry participants in considering the proposal, including financial planners, dealer groups, and investment providers, many of whom raised concerns that the merger would pose to the market.
The competition watchdog said the proposed sale did not include the distribution network of financial planners of the North products that currently support the North platform, and was dependent on third parties to complete certain actions involving complex and long term behavioural obligations that presented risks.
"The ACCC found that, together, these factors raised considerable uncertainty as to whether the proposed purchaser operating the North platform administration business would be able to provide an effective competitive constraint to a combined NAB-Axa," said Kell.
AXA, NAB and IOOF have all said they would consider the implications of the decision.
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