“Following the proposed acquisition, ANZ will continue to face an existential commercial imperative to compete vigorously against a crowded field of competitors.”
The release comes two months after the ACCC initially warned it was concerned about the $4.9 billion transaction, and the potential for “co-ordinated activity”, such as interest rate pricing, between an enlarged ANZ and other big four banks.
ACCC deputy commissioner Mick Keogh at the time indicated that the watchdog was open to the idea of a merger between Suncorp and another regional bank. Bendigo and Adelaide, in its submission, said it was “ready” to make a competitive offer for Suncorp Bank given the chance.
‘Modest’ market share
Bendigo and Adelaide argued an ANZ-Suncorp Bank deal would give ANZ even more scale to inhibit the ability of smaller competitors to grow.
But ANZ, in its final push to get the deal over the line, said competition in the banking sector “continues to increase” and described its market share, and that of Suncorp’s, as “modest”.
ANZ also pointed to the competitive intensity of the sector, which has put revenue under pressure over several years. ANZ said net interest margins sector-wide had contracted over the past 20 years, from mid-3 per cent to below 2 per cent.
ANZ also played down Suncorp’s performance as a bank challenger, describing it as “not a particularly competitive constraint today either in the banking sector generally or against the major banks”.
It suggested that if the ACCC was to block the deal in July, it would go to the Australian Competition Tribunal.
“The proposed acquisition does not meet or exceed the thresholds at which the ACCC and Australian courts typically consider that unilateral concerns may arise,” the bank said. “This includes in relation to combined market shares, any incremental increase in ANZ’s market share, market concentration, and any incremental increase in market concentration.”
Based on the evidence, ANZ said it would be “a significant departure from accepted principles” for the ACCC to find that the merged firm could raise prices after a deal, a concept known as ‘unilateral effects’.