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ANZ/Suncorp deal will be first test for new ACCC boss

The watchdog has long bemoaned the market power of the big four banks, but proving that an ANZ takeover of Suncorp will substantially lessen competition may prove complex. 

ANZ will have a much easier time convincing investors about the merits of a $4.9 billion takeover of Suncorp’s bank than it will about buying accounting software group MYOB.

But convincing the new chair of the Australian Competition and Consumer Commission, Gina Cass-Gottlieb, may be another thing entirely.

Gina Cass-Gottlieb will have a close look at ANZ’s takeover of Suncorp’s bank.  David Rowe

The deal looms as the first major test for Cass-Gottlieb. But although the idea that the power of the big four should not be increased is almost a foundational philosophy for the watchdog, proving ANZ’s takeover will result in a substantial lessening of competition will be more complex.

Former ACCC chairman Graeme Samuel approved Australia’s last major bank takeovers – Commonwealth Bank’s acquisition of BankWest and Westpac’s purchase of St George – through gritted teeth, given the turmoil the smaller groups faced in the GFC left him little choice. But as far back as 2010, he warned any further mergers between a big four bank and a regional rival would face intense and possibly insurmountable scrutiny.

Samuel’s successor, Rod Sims, regularly bemoaned the lack of competition in the banking sector and conducted inquiries into mortgage competition in 2018 and 2020. The ACCC even set up a Financial Services Unit that was (comically) asked by the Coalition government to make recommendations to improve banking competition every six months.

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All of which would appear to make it easy for the ACCC to knock back ANZ’s Suncorp takeover. But data from the prudential regulator suggests that the actual impact on competition will be relatively small.

While the big four’s share of home lending is 75.2 per cent, ANZ is the laggard of the bunch with a 13.1 per cent share. Suncorp is the smallest regional bank with a 2.3 per cent share, meaning the pair’s combined share of 15.4 per cent would be way behind CBA (market leader with 26 per cent) and Westpac (21.6 per cent).

Deposit market shares are broadly similar, with ANZ holding 13.3 per cent and Suncorp holding 1.7 per cent. ANZ’s combined deposit share post-merger of 15 per cent would rank it fourth of the big four, behind third-placed NAB with a 16.9 per cent share.

Three competitors down to two is clearly a substantial lessening of competition. Four down to three also meets the criteria in banking.

But seven (the big four plus Bendigo & Adelaide Bank, Bank of Queensland and Suncorp) down to six is a harder case to make.

Although that probably won’t prevent Cass-Gottlieb from trying.

More on the ANZ-Suncorp deal

James Thomson is a Chanticleer columnist based in Melbourne. He was the Companies editor and editor of BRW Magazine. Connect with James on Twitter. Email James at j.thomson@afr.com

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