ACCC taking time to ‘reflect’ on tribunal decision

The Australian Competition and Consumer Commission (ACCC) has reacted to the move by the Australian Competition Tribunal to overturn its decision to refuse the ANZ-Suncorp merger proposal.

On 4 August 2023, the ACCC said it would not authorise the proposed acquisition between the two lenders because it was not satisfied the transaction would not result in a substantial lessening of competition in the supply of home loans nationally, small- to medium-sized enterprise banking in Queensland, and agribusiness banking in Queensland and that the claimed public benefits did not outweigh the likely public detriment.

The ACCC was concerned that the proposed acquisition of Suncorp Bank by ANZ would further entrench an oligopoly market structure that is dominated by the four major banks.

However, on Tuesday morning (20 February), the Australian Competition Tribunal – the review body for authorisation decisions made by the ACCC – handed down its decision in the Federal Court of Australia in Sydney.

In its determination, it found that the merger would not lessen – or be likely to lessen – competition in mortgage lending, SME finance, or agri lending in Queensland.

The tribunal’s decision set aside the ACCC’s earlier decision not to grant authorisation for the proposed acquisition.

Noting the decision, the ACCC highlighted that the tribunal had made its finding “based on its review of the material before the ACCC, and some limited new information”.

The competition watchdog said that while the tribunal was satisfied that the transaction would not result in a substantial lessening of competition in any relevant market, it also found that many of the public benefits claimed by ANZ and Suncorp were either not public benefits or were not specific to the proposed acquisition.

However, the tribunal found that any detriments from the acquisition were uncertain and unlikely to outweigh the integration benefits.

ACCC chair Cass-Gottlieb said: “The ACCC notes the decision and will reflect on it.

“The Tribunal’s decision demonstrates the checks and balances of an administrative merger approval process.

“The Tribunal made findings on fundamental matters that informed our concerns, including that the national market for home loans is currently conducive to coordination and that material barriers to entry and expansion remain.

“However, the Tribunal didn’t consider that the proposed acquisition would meaningfully impact on the likelihood of coordination.

“Banking markets are critical for many home owners, businesses, and farmers. The ACCC will continue to apply scrutiny to these markets across the breadth of our functions including merger assessments and enforcement investigations.”

Bendigo and Adelaide Bank also acknowledged the decision on Tuesday, as it has vocally opposed the ANZ-Suncorp merger – mostly because it had been hoping to merge with Suncorp itself.

However, in the determination, the tribunal said that such a merger “likely would face significant execution challenges, in particular, realising postulated synergies within a sufficiently short time period to make a merger value accretive for both Bendigo and [Suncorp].”

In a statement, the bank said that it “maintains the view that the proposed merger will lead to a lessening of competition, leaving customers and communities worse off. Bendigo and Adelaide Bank is proud to be an independent regional bank.”

“We remain focused on our strategy and our purpose of feeding into the prosperity of our customers and their communities, not off them,” the statement continued.

Noting the decision, competition lawyer Kirsten Webb, a competition partner at Clayton Utz, said: “The ACCC is an experienced regulator, but in the small number of contentious mergers, reasonable minds can differ and the ACCC, which often heavily focuses on theoretical concerns, might not always get it right.”

She added that the decision showed “the important role of merits review by the Australian Competition Tribunal, as a specialist body bring together law, economics and industry expertise, in deciding whether mergers should proceed especially where public benefits are involved”.

According to Ms Webb, the tribunal’s decision seems to have “focused on certainty”, weighing the potential risk of a reduction in competition, which she said was “considered too uncertain and insignificant against the more certain benefits from integration and productive efficiency forecast to arise”.

“The decision has important implications for the Treasurer’s decision whether to grant the ACCC more powers over mergers,” Ms Webb added.

Members of the broking community have also reacted to the news, with some welcoming the tribunal’s acknowledgement of brokers in providing competition in the market while other raised concern relating to what the merged entity would look like.

[Related: ANZ-Suncorp merger given green light]