ACCC rejects ANZ’s Suncorp Bank takeover bid

ACCC deny merger Suncorp Bank ANZ

The Australian Competition and Consumer Commission (ACCC) has denied ANZ’s bid to acquire Suncorp Bank, citing in its decision the potential for a “substantial lessening of competition” in several key markets.

The ACCC’s final decision comes after multiple postponements by the regulator, and nine months after ANZ initially lodged its application to buy the tier-two bank from Suncorp Group.

ACCC deputy chair Mick Keogh said the regulator “was not satisfied that the acquisition is not likely to substantially lessen competition in the supply of home loans nationally, small and medium enterprise banking in Queensland, and agribusiness banking in Queensland”.

“These banking markets are critical for many homeowners and for Queensland businesses and farmers in particular. Competition being lessened in these markets will lead to customers getting a worse deal.”

He added the criticality of “second-tier banks” as competitors against the majors, “especially because barriers to net entry at scale into banking are very high”.

“Evidence we obtained strongly indicates that the major banks consider the second-tier banks to be a competitive threat,” Keogh said.

“The proposed acquisition of Suncorp Bank by ANZ would further entrench an oligopoly market structure that is concentrated, with the big four banks dominating.”

Suncorp Group, in a statement in response to the decision, said it was “surprised and disappointed with the determination”.

“When we embarked on this transaction, we were of the firm belief it was in the best interests of our customers, shareholders and employees and that it would provide a net benefit to the Australian economy,” said Suncorp Group chair Christine McLoughlin.

“Together with the external economic and industry experts, we determined that this deal would not adversely impact the competitive dynamics in the markets in which we operate.”

She added: “There is nothing we’ve seen throughout the ACCC process that has caused us to change our view on these matters.”

ANZ chief executive Shayne Elliott added: “We are naturally disappointed and disagree with the ACCC’s decision.

“We are closely reviewing the determination and will seek an independent decision through the avenues of review available to us.

“We believe the acquisition will improve competition, which will benefit Australian consumers, particularly in Queensland. All of the relevant markets are intensely competitive and will continue to be intensely competitive after the acquisition.

ANZ noted that, under Australian competition law, a decision by the ACCC not to grant authorisation can be reviewed by the independent Australian Competition Tribunal.

The ACCC also flagged two potential “commercially realistic” outcomes should ANZ not be successful in its takeover: that Suncorp Bank continues in its current state, under the ownership of Suncorp Group, or that it accepts a competing M&A bid by Bendigo and Adelaide Bank.

“After undertaking this intensive assessment, the ACCC considers that there is a realistic prospect of a Suncorp Bank transaction with Bendigo and Adelaide Bank,” Keogh said.

“We know Suncorp has extensively considered the option of a transaction with Bendigo and Adelaide in particular.”

This article was first published in FST’s sister publication, Financial Newswire.