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In a submission to the Australian Competition Tribunal, major lender ANZ has stated that its incorporation of Suncorp Bank “would not alter those competitive dynamics or substantially lessen competition in any relevant market”.
After the Australian Competition and Consumer Commission (ACCC) decided to not grant authorisation for ANZ’s proposed acquisition of Suncorp Bank, the lender applied for a review at the Australian Competition Tribunal, which can “vary or set aside” the ACCC’s decision.
In its submission, the big four bank stated that the Australian banking industry is made up of several competitive markets “in which no single bank, or group of banks, has a dominant position”.
It argued that the competitive position of both it and other major banks varies, with smaller organisations and new entrants such as Macquarie Bank in home loans, Rabobank in agribusiness and Judo Bank in SME lending, meaning the “market share of major banks has declined”.
The lender stated that even if the proposed acquisition was allowed, it would “continue to be the smallest of the four largest banks by reference to banking system assets”.
It added that the merger would “not dilute ANZ’s incentives to compete to retain Suncorp Bank’s customers, who can readily switch to other banks”.
ANZ stated to the tribunal that the acquisition of Suncorp Bank would not shrink the competition in the home loan market, as the ACCC accepted that the “recent price competition is intense and that ANZ, as the smallest of the major banks, is incentivised to compete”.
The submission revealed that the contentions that the merger would lead to a shrinking of the home loan market and subsequently weaker price competition raised by both the ACCC and Bendigo and Adelaide Bank (Bendigo) were not endorsed by the evidence.
The submission stated: “Nor does the evidence establish that, in the future with the proposed acquisition compared with any commercially realistic counterfactual, coordinated conduct is more likely to be initiated or be sustainable, let alone to any degree, which could give rise to a concern of a substantial lessening of competition.
“The three premises on which the ACCC and Bendigo base that contention are wrong and not supported by the evidence.”
Furthermore, ANZ commented that the growing number of non-bank lenders joining the home loan market was ensuring there was sufficient competition.
It stated: “Banks take seriously the threat of competition and disruption from neobanks, fintech and big technology businesses such as Apple and Google and other non-bank lenders.
“ANZ and other larger banks have invested significantly in developing and responding to innovation by traditional banks, neobanks, non-bank lenders, fintechs and big businesses.”
Regarding a proposed amalgamation between Bendigo and Suncorp Bank, ANZ’s submission commented that “there is no real commercial likelihood of an alternative merger of Bendigo and Suncorp Bank”.
It added that if the ANZ and Suncorp merger did not proceed, the alternative would be the “status quo”.
“Even if a merger between Bendigo and Suncorp Bank were to occur, there is no real likelihood that a merged Bendigo/Suncorp Bank would become a materially more effective competitor or impose a competitive constraint greater than that exerted by either bank alone,” the submission stated.
“Accordingly, the competitive dynamics in the relative markets are materially the same in both the Bendigo merger and the status quo counterfactuals and, therefore, in the future with the proposed acquisition.”
[Related: Merged Bendigo-Suncorp bank could be a ‘more effective competitor: ACCC]
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