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The Australian Consumer & Competition Commission (ACCC) has confirmed that it has received the merger authorisation application from ANZ Banking Group (ANZ) regarding its proposed acquisition of the banking arm of Suncorp, with public consultation now underway.
The transaction, which was first proposed in July 2022, will now be considered by the ACCC in line with its merger authorisation process and submissions from interested parties will be accepted until 18 January 2023.
Unlike an informal merger review process (used for the majority of merger matters that come before the ACCC), the commission will only grant merger authorisation if it is satisfied that either:
- The proposed acquisition would not be likely to have the effect of substantially lessening competition
- The likely public benefit resulting from the proposed acquisition outweighs the likely resulting public detriment
ANZ’s application outlines the bank’s position that the acquisition would not be likely to substantially lessen competition and that the public benefits of the acquisition will outweigh any public detriments.
This was formed on the argument that:
- The relevant markets where ANZ and Suncorp Bank operate are already “intensely competitive” with numerous competitors and new entrants responding to the needs of customers, who can choose from a broad range of products and expect further innovation.
- It won’t materially alter ANZ’s market share or significantly increase concentration in any market, given that ANZ is the smallest of the four major banks and the acquisition will allow ANZ to grow in Queensland where it has a smaller presence and can “acquire scale to compete better”.
- ANZ and Suncorp Bank complement each other and “will be a more capable competitor together than separately” given they largely have complementary customer portfolios, both geographically and by segment, in “highly competitive markets”.
The major bank also submitted that the benefits to the public would outweigh any detriments.
“Selling Suncorp Bank will enable Suncorp Group to have a singular focus on the development of its insurance businesses at a time when Australians need financial protection from natural disasters, while buying Suncorp Bank will enable ANZ to continue to invest in meeting evolving customer needs and play a bigger role in the continuing growth of the Queensland economy,” the bank said.
An extension has been granted for the merger authorisation assessment (which usually has a statutory time limit of 90 days) so the ACCC decision is now scheduled for 12 June 2023.
According to the ACC, an extension is usually granted when either:
- The issues relating to the merger are particularly complex or require extensive engagement.
- When the ACCC needs to obtain or review extensive material.
- Where the applicant proposes a remedy to address possible ACCC concerns.
Commenting on the beginning of its formal review, ACCC deputy chair, Mick Keogh, commented: “Now that we have received the application, we are able to commence the formal process of considering the merger authorisation application, and will be seeking submissions from interested parties.”
ACCC chair, Gina Cass-Gottlieb, has disclosed a potential conflict of interest with the authorisation as a result of work performed prior to being appointed as chair of the ACCC.
The commission has said she will not participate in discussion of this authorisation or decision-making for this authorisation to manage this conflict.
In addition to ACCC authorisation, the acquisition is subject to additional conditions including approval from the federal Treasurer and Queensland legislative amendments.
If authorisation is granted, completion of the acquisition is expected to occur in “the second half of calendar year 2023”.
‘Financing the growth ambitions of Queensland’
After the ACCC confirmed receipt of the merger authorisation, ANZ chief executive officer, Shayne Elliott, noted that the Suncorp acquisition would benefit the Queensland economy (where Suncorp Bank is headquartered and would remain to be so) and “increase competition”.
The ANZ CEO said: “Queensland is thriving and faces the prospect of strong opportunities to further grow and prosper. Since March 2020, Queensland has recorded better economic growth, better workforce participation and more interstate migration than any other state or territory in Australia.
“Queensland contributes 18 per cent to Australia’s GDP and ANZ is well placed to invest in the opportunities ahead, including in energy projects, renewable projects, green Olympic infrastructure, and Queensland businesses like SMEs and agribusinesses.”
Mr Elliott highlighted that the ANZ board had visited the Sunshine State last month and “came away more convinced about the opportunity to support our customers and finance the growth ambitions of Queensland”.
“Through our acquisition of Suncorp Bank we will increase our presence in one of Australia’s most important states and, we believe, improve competition,” he said.
ANZ has said it has already begun to prepare for the integration of Suncorp Bank into ANZ, including work on a joint transition plan agreed with Suncorp as it awaits the ACCC decision.
Suncorp Group CEO, Steve Johnston, added: “The application to the ACCC includes supporting statements from Suncorp reinforcing our view that the sale will benefit our customers, people, shareholders, and the state of Queensland.
“The sale of Suncorp Bank will result in a dedicated Trans-Tasman insurance company at a time when the value of insurance has never been greater, and the need for continued investment in a vibrant private insurance sector never more important to meet the changing needs of customers, communities and our broader economies.
“We remain respectful of the process as the ACCC considers ANZ’s application, and the views of other interested parties, and look forward to working constructively with the regulator over the coming months.
“Suncorp still anticipates completion in the second half of calendar 2023, based on the published timeline and subject to regulatory approvals.”
The proposed acquisition has also been met with some criticisms after Bendigo and Adelaide Bank — which had itself wished to acquire Suncorp’s banking arm but claimed it was eschewed in favour of ANZ — warned that the move would “provide sub-optimal outcomes for customers and communities”.
“We believe this will only further entrench Australia’s banking oligopoly and provide sub-optimal outcomes for customers and communities,” the group’s board chair, Jacqueline Hey, said last month.
“The proposed sale of Suncorp to ANZ Banking Group is still to be approved by the relevant federal and state governments and the ACCC, and we await their respective decisions with interest.”
The Suncorp Bank-ANZ deal is the latest in a suite of consolidations that have been taking place in the banking space recently, with several mutual banks working towards mergers (including Heritage Bank/People’s Choice and Greater Bank/Newcastle Permanent), while ME Bank was acquired by BOQ group in July 2021 and 86 400 was bought by National Australia Bank Limited (NAB) in May 2021.