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ANZ deems ACCC’s rejection of Suncorp acquisition a ‘fatal mistake’

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The consumer watchdog made a “fatal mistake” when it knocked back ANZ’s $4.9 billion acquisition of Suncorp Bank, a tribunal was told.

What could be the biggest merger in the banking sector has been put on hold while ANZ’s counsel attempts to sway a tribunal into rejecting the Australian Competition and Consumer Commission’s (ACCC) decision to refuse the multibillion-dollar acquisition.

On the first hearing day, counsel Ruth Higgins SC told the Australian Competition Tribunal the ACCC decision was made in error because it lacked “diffident non-satisfaction”, or a lack of confidence.

Dr Higgins submitted the error should be considered alongside the ACCC’s failure to consider mortgage brokers, and regulatory changes meant there is more competition across the banking sector, leaving it open for the fourth and ninth largest banks to merge.

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“These are changes of technology and consumer awareness and there is no reason to believe this will collapse into consumer or competition inertia,” Dr Higgins said.

While the takeover, announced mid-last year, would improve ANZ’s standing against National Australia Bank, Commonwealth Bank, and Westpac, Dr Higgins said it would still remain the fourth largest bank and its “aggregate interest” in the market share would be small.

Dr Higgins added there are “public benefits” likely to result from the acquisition “through improved performance” of Suncorp’s insurance benefits and “at least some benefit” in funding costs.

The tribunal’s task would now be to determine “whether the decision was the objectively correct or preferable decision”.

During opening submissions, Dr Higgins said ACCC’s “fatal mistake” is in failing to “engage in the symmetries” between the big banks.

She said the commission focused only on a comparison between the major banks and the smaller banks “as a block”, which “misunderstands the relevant comparisons for symmetry”.

“One doesn’t compare conglomerates, one compares individual entities,” Dr Higgins said.

Referring to a report commissioned by the ACCC, which found no evidence of price coordination, Dr Higgins accused the watchdog of adopting a “live and let live” approach to pricing.

“It is not enough that theoretical detriments be speculative,” Dr Higgins said.

“I cannot rule out a meteor strike of this building today but it is extremely unlikely.”

ACCC says it’s defending competition

In August this year, ANZ confirmed it had filed an appeal against the ACCC’s decision to block its intended acquisition of Suncorp.

Earlier that month, the ACCC announced that it had decided not to grant merger authorisation for ANZ to acquire Suncorp Group’s banking division. At the time, the ACCC’s deputy chair, Mick Keogh, said: “We are not satisfied that the acquisition is not likely to substantially lessen competition in the supply of home loans nationally, small-to-medium enterprise banking in Queensland, and agribusiness banking in Queensland.”

Mr Keogh highlighted the significance of second-tier banks like Suncorp as formidable competitors against major banks, particularly considering the substantial barriers to entry at scale into the banking sector.

“Evidence we obtained strongly indicates that the major banks consider the second-tier banks to be a competitive threat,” he continued.

"The proposed acquisition of Suncorp Bank by ANZ would further entrench an oligopoly market structure that is concentrated, with the four major banks dominating. It also limits the options for second-tier banks to combine and strengthen in a way that would create a greater competitive threat to the major banks.”

At the time, it was also revealed that if the tribunal does provide approval, the deal still remains subject to receiving approval from Treasurer Jim Chalmers as well as legislative amendments in Queensland.

ANZ originally announced that it had agreed to acquire Suncorp Bank last July in a deal that it said would accelerate the growth of its retail and commercial businesses.

ANZ deems ACCC’s rejection of Suncorp acquisition a ‘fatal mistake’

The consumer watchdog made a “fatal mistake” when it knocked back ANZ’s $4.9 billion acquisition of Suncorp Bank, a tribunal was told.

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Maja Garaca Djurdjevic

Maja Garaca Djurdjevic

Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.

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