Banks appealed after ACCC blocked the $4.9 billion tie-up
ANZ Bank's proposed $4.9 billion acquisition of Suncorp Bank now awaits a decision from the Australian Competition Tribunal, scheduled to be announced on Feb. 20.
The tribunal, led by deputy president and Federal Court justice John Halley, former ACCC commissioner Jill Walker, and Keypath chair and Domain director Diana Eilert, concluded a two-week hearing after hearing closing arguments from the involved parties, The Australian reported.
The arguments presented during the hearing revolved around differing interpretations of national competition law and the Australian Competition & Consumer Commission's previous decision to block the deal.
Suncorp's counsel, Cameron Moore SC, argued that the Queensland-based bank posed no threat to the market power of the larger banks, as it represented less than 2% of national banking assets and faced several larger competitors, The Australian reported. Conversely, the ACCC maintained that the acquisition would strengthen the dominance of the big four banks, resulting in a worse deal for consumers, particularly in home lending.
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The ACCC proposed an alternative merger between Bendigo Bank and Suncorp, suggesting it would provide a competitive balance against the market-dominating major banks. However, Moore argued that such a tie-up would diminish Suncorp's financial power as it would not be part of a larger financial group. Bendigo Bank claimed that its attempts to engage with Suncorp had been rejected, according to The Australian.
“There was a suggestion that a merger between Bendigo and Suncorp would mean the major banks would have more to worry about than about these individual banks at the moment,” Moore said. “We would say that is not self-evident because in the case of Suncorp the major banks would know it had suffered a significant funding dis-synergy and that its cost of funding was now much higher than it used to be when it was part of the Suncorp group.”
Garry Rich SC, counsel for the ACCC, said that the acquisition would further consolidate the power of Commonwealth Bank, ANZ, NAB, and Westpac, which have long dominated the home lending market.
“Fundamentally, banking is a scale game,” Rich told the tribunal. “Increased scale leads to lower costs, debt and equity funding. All else being equal, those lower funding costs enable the four major banks to increase their market share, or at least maintain their existing shares in the face of any challenge from other competitors because their marginal costs are lower.”
Rich noted that currently, the four major banks collectively hold a 74.5% market share in home lending. With the proposed acquisition, their collective market share would rise to around 76.8%, pushing ANZ to the third spot, The Australian reported.
Ruth Higgins, counsel for ANZ, countered these arguments by stating that the ANZ-Suncorp merger would not harm competition in key rural markets in Queensland, as many rivals were already operating effectively without physical branches, lowering entry barriers. Higgins also highlighted the growth of digital banking, reduced cash transactions, and the rise of brokers, which have increased competition in agribusiness and business banking.
In addition to these arguments, the tribunal will consider written submissions from the Queensland government, which supports the approval of the deal based on "public interest" grounds, The Australian reported.
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