Australia’s competition watchdog has refused to authorise ANZ’s acquisition of Suncorp Bank.
The Australian Competition & Consumer Commission (ACCC) said it had rejected the $4.9 billion deal, which was announced in July 2022, because it might reduce competition in the banking sector.
“We are not satisfied that the acquisition is not likely to substantially lessen competition in the supply of home loans to Australian consumers,” ACCC Deputy Chair Mick Keogh said.
“We consider there is an increased likelihood of coordination between the four major banks in the supply of home loans should Suncorp Bank become part of ANZ. Coordinated market outcomes mean competition is muted at best, to the detriment of customers.
“A substantial lessening of competition in home loans would have major flow-on impacts to Australians with a mortgage. More than a third of Australian households have a mortgage, with loans totalling around $2 trillion, illustrating how critical it is that competition in this market is not substantially lessened.
“The proposed acquisition increases the likelihood that the major banks adopt a ‘live and let live’ approach to each other, aimed at maintaining or protecting their existing market shares. This is instead of competing strongly on price, innovation and the quality of their service and products to win customers.”
ACCC concerned about mortgage competition
Even before ANZ and Suncorp announced their deal, the ACCC was concerned about the risk of coordination between the big four banks, due in part to their similarity and ability to price signal.
“While there is evidence of increased competition in the home loans market recently, we are not persuaded that this level of competition will continue,” Mr Keogh said.
“We note recent commentary by bank chief executives that they are stepping back from aggressive promotions. If this market was truly competitive, we would not expect to see banks publicly flagging plans to reduce the competitiveness of their offerings.”
How the ANZ merger would’ve affected Suncorp customers
Under the terms of the deal, it would’ve been business as usual for Suncorp Bank customers – at least in the short-term.
ANZ had licensed the Suncorp Bank brand for five to seven years, suggesting it planned to keep the brand alive for some time.
Suncorp Bank would’ve initially operated under its existing banking licence, with no changes to the total number of branches in Queensland for at least three years and no net job losses in Queensland for the same period.