‘Competition concerns’ flagged in Suncorp-ANZ deal: ACCC

The Australian Competition and Consumer Commission (ACCC) is calling for further submissions from industry and consumers on how the proposed acquisition may impact competition.

On 2 December 2022, the ACCC received an application for merger authorisation from ANZ Banking Group (ASX:ANZ) in relation to its proposal to acquire Suncorp Group’s (ASX:SUN) banking arm (first announced in July 2022).

The proposed acquisition involves ANZ acquiring the banking arm of Suncorp Group, separate from the group’s insurance businesses in Australia in New Zealand, which do not form part of the acquisition.

On Tuesday (4 April), the ACCC released its statement of preliminary views (the statement) seeking further comment from interested parties, after receiving 24 public submissions, on issues including the extent to which the acquisition will impact lending rates, deposit rates, fees and charges, consumer choice, service levels, and innovation.

The ACCC’s preliminary view is that the areas of competition between ANZ and Suncorp Bank that have the most potential to raise competition concerns stem from the activities in which they overlap, as these are the areas where interested parties “have raised the most issues”.

For example, the supply of agribusiness banking, small and medium-sized enterprise (SME) banking, home loans, and retail deposits (including transactions and savings accounts and term deposits).

The ACCC also considers there is a higher degree of geographic overlap between ANZ and Suncorp Bank in Queensland and northern NSW.

In making its final decision, the ACCC is considering key issues, particularly around factors affecting competition and the likely benefits and detriments of the proposed acquisition.

As well as the potential loss of competitive constraint on the major banks due to the removal of an independent second-tier bank and also if Suncorp Bank merged with another second-tier bank such as Bendigo and Adelaide Bank.

The ACCC is calling for new submissions until 18 April 2023 from interested parties before a final decision can be made on 12 June 2023.

ACCC deputy chair Mick Keogh said any acquisition of a potential rival by one of the major banks must be closely considered.

“Before we finalise our views, we welcome further submissions from stakeholders and consumers alike on the issues raised,” Mr Keogh said.

“We are also eager to hear from stakeholders about whether they think the acquisition will have any public benefits.”

The ACCC can only grant authorisation if it is satisfied in all the circumstances that either there is not a likely substantial lessening of competition or that there are likely to be public benefits that outweigh any public detriments.

Mr Keogh said the ACCC’s home loan price inquiry reports of 2018 and 2020 demonstrated “competition between the biggest four banks has been at best muted”.

ANZ welcomes scrutiny

Acknowledging the questions raised in the review, ANZ chief executive Shayne Elliott said the bank “welcomed the scrutiny”.

“We welcome the further community consultation that will now occur. Queensland is thriving and faces the prospect of strong opportunities to further grow and prosper,” Mr Elliott said.

“We’re excited to invest in the opportunities ahead.”

In its submission, ANZ stated the proposed acquisition would deliver benefits to ANZ and to ANZ’s and Suncorp Bank’s customers, including increased scale to enable continual and more efficient investment in digital transformation and innovation.

The proposed acquisition also seeks to create a “superior bank for customers and to better compete in the digital age” and allow ANZ to grow in the Queensland market, where it has a smaller presence, the bank submitted.

In addition to the ACCC authorisation, the acquisition is subject to additional conditions including approval from the federal Treasurer and Queensland legislative amendments.

While the acquisition remains subject to these conditions, ANZ continues its preparations for the integration.

Likewise, Suncorp maintains the view that the sale is in the “best interests of its customers, employees, shareholders, the state of Queensland and the nation” and will result in a stronger insurance and banking system.

Suncorp said it would also provide a “substantive response to the submission made by Bendigo and Adelaide Bank”, which had previously opposed the proposal stating it would “provide suboptimal outcomes for customers and communities”.

[Related: ANZ confident over Suncorp deal]