The ACCC has decided not to grant merger authorisation for ANZ Banking Group to acquire Suncorp Group’s banking arm.
Under the statutory test, the ACCC must not grant authorisation unless it is satisfied in all the circumstances that the proposed acquisition would not be likely to substantially lessen competition, or that the likely public benefits would outweigh the likely public detriments.
“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,” said Mick Keogh, Deputy Chair of the ACCC.
“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.”
“Second-tier banks such as Suncorp Bank are important competitors against the major banks, especially because barriers to new entry at scale into banking are very high. Evidence we obtained strongly indicates that the major banks consider the second-tier banks to be a competitive threat,” said Keogh.
“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.”
The ACCC accepted that ANZ would benefit from cost savings from the proposed acquisition and that Suncorp Group would benefit from being able to focus on its insurance business, and there may also be prudential benefits from the transaction.
However, the ACCC considered that those benefits do not outweigh the likely detriments, particularly competitive detriments likely to result from the proposed acquisition.
Christine McLoughlin, Suncorp Group Chairman, said the organisation was surprised and disappointed with the determination and would fully support ANZ through the next step in the merger authorisation process – a referral of the ACCC’s decision to the Australian Competition Tribunal.
“When we embarked on this transaction, we were of the firm belief it was in the best interests of our customers, shareholders and employees and that it would provide a net benefit to the Australian economy,” said McLoughlin.
“Together with external economic and industry experts, we determined that this deal would not adversely impact the competitive dynamics in the markets in which we operate.
“There is nothing we’ve seen throughout the ACCC process that has caused us to change our view on these matters and we believe the Tribunal will accept the merits of our case.
“In fact, the 12 months that have passed since the transaction was announced have only reinforced the rationale for the sale, and the importance of the benefits it will deliver for our stakeholders, the state of Queensland and the broader public.
“Together with ANZ, we will make our case to the Tribunal, which is led by a justice of the Federal Court of Australia.”
According to Suncorp, should the Tribunal provide its approval, the sale remains subject to the amendment of the State Financial Institutions and Metway-Merger Act, and final approval from the Federal Treasurer under the Financial Sector (Shareholdings) Act.
Subject to all approvals, Suncorp expects completion by the middle of the 2024 calendar year.