Unification would be a "disaster", says peak consumer body
ANZ’s takeover of Suncorp’s banking business would be “a disaster” that would “materially increase” the risk of co-ordinated bank conduct across products and reduce competition, according to consumer groups.
In a submission to the Australian Competition and Consumer Commission, the Consumers Federation of Australia opposed ANZ’s proposed $4.9 billion takeover of Suncorp Bank, The Australian reported.
“Removing Suncorp Bank from the marketplace leaves us with the foregone conclusion that the other remaining second-tier banks can be acquired by the four majors. It is a disaster for effective competition,” CFA chair Gerard Brody told The Australian. “Also, newer digital banks that were supposed to challenge the banking oligopoly have either been gobbled up by the big banks or closed their doors.”
The CFA’s submission comes as the ACCC considers whether to approve the deal. The regulator is expected to make a decision in June.
The CFA’s opposition comes on the heels of objections to the merger by Jeffries analyst Brian Johnson, who said this week that the deal was “anti-competitive.” Other industry players, including Bendigo and Adelaide Bank head Marnie Baker, have also slammed the deal.
The CFA said that the acquisition would be detrimental to consumers.
“Numerous reports, including from the ACCC, as well as our observations, lead us to conclude that the big four banks are an oligopoly and operate largely as one,” the peak body said in its submission. “Competition between the big four banks is ineffective.”
The submission posited that the nation’s fifth-largest bank, Macquarie, doesn’t compete directly with the big four, but instead goes after high-net-worth customers.
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“Three second-tier regional banks – Suncorp Bank, Bank of Queensland, and Bendigo and Adelaide Bank – provide some competitive pressure for the big four,” the CFA said. “We consider that removing any of these three will substantially lessen competition. Each retains extensive branch networks (particularly in regional communities) and offers a full-service alternative to the big four banks.”
The ACCC is requiring rival banks to provide it with information about industry pricing, marketing, technology and customer switching as it makes its assessment, The Australian reported. The merger will require ACCC sign-off as well as approval from the state and federal governments.
The CFA said that the deal would cause “a range of public detriments” including impacts on banking accessibility and inflation.
“Ineffective competition and the existence of market power can contribute to high prices,” it said.
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