In a significant decision, the Australian Competition and Consumer Commission (ACCC) has declined to grant merger authorisation for ANZ Banking Group to acquire the banking arm of Suncorp Group.
The decision was made after careful consideration under the statutory test where the ACCC must ensure that the proposed acquisition would not substantially lessen competition or that the likely public benefits would outweigh the probable public detriments.
ACCC deputy chair Mick Keogh articulated the commission's concerns, specifically highlighting the potential impact on competition in the national home loans market, small to medium enterprise banking, and agribusiness banking in Queensland.
“The acquisition is not likely to substantially lessen competition in these areas," Keogh said. "Competition being lessened will lead to customers getting a worse deal.”
The decision reflects the importance of maintaining competition, particularly against the four major banks.
The ACCC's investigation found that the acquisition could further entrench an oligopoly market structure, limiting the options for second-tier banks to combine and pose a greater competitive threat.
We’ve decided not to grant merger authorisation for ANZ to acquire Suncorp’s banking arm. https://t.co/sgkI23xLF6 pic.twitter.com/2UQX8Zk3MD— ACCC (@acccgovau) August 3, 2023
Critical not to lessen competition
The ACCC also expressed concerns over the increased likelihood of coordination in the Australian home loans market.
With over a third of Australian households holding a mortgage, totalling around two trillion dollars, the commission considered it critical not to lessen competition.
Keogh also referred to the recent behaviour of bank executives and the potential for increased coordination between major banks as areas of concern.
The acquisition could have pushed ANZ closer to the Commonwealth Bank and Westpac in terms of market share, reducing the incentive for aggressive competition and possibly leading to a 'live and let live' approach.
Additionally, the ACCC found the potential substantial lessening of competition in both small and medium business banking and agribusiness banking in Queensland.
Keogh emphasised that Suncorp Bank's unique product offerings and competitive benefits would not be available if ANZ acquired it.
“These banking markets are critical for many homeowners and for Queensland businesses and farmers in particular. Competition being lessened in these markets will lead to customers getting a worse deal.” – ACCC Deputy Chair Mick Keogh.— ACCC (@acccgovau) August 4, 2023
What's next
The ACCC's assessment also considered the possible combination of Suncorp Bank with Bendigo and Adelaide Bank, with a realistic prospect for such a transaction.
The commission has released its determination and executive summary, with full reasons to be made public on Monday, pending confidentiality checks with the relevant parties.
The denial represents a significant decision in Australian banking, with implications for competition, pricing, and the diversity of products and services available to consumers and businesses.
As the nation watches the development of the banking landscape, the ACCC's commitment to preserving a competitive environment remains clear and robust.