After a more than six-month deliberation, the Australian Competition Tribunal (ACT) has approved the Australia and New Zealand Banking (ANZ) Group’s proposed takeover of tier-two rival Suncorp Bank. 

The ACT’s decision effectively overturns the competition watchdog’s August 2023 ruling denying ANZ’s $4.9 billion takeover bid.

ACT deputy president Justice John Halley told the Federal Court that, in the Tribunal’s assessment, the merger proposal passed two key conditions for approval: that it would not substantially lessen competition in key markets (notably, in home lending, agribusiness and SME banking), and that the benefits of the merger to the public would outweigh detriments.

Justice Halley said the ACT was satisfied that ANZ would remain constrained by other competitors, noting that Suncorp’s offering “is not that unique” and its penetration in the Queensland banking and home loans market, where Suncorp is primarily based, remains relatively low.

“The tribunal has concluded that the small increase in the market share of ANZ, if the proposed acquisition proceeds, would not have a meaningful impact on the degree or likelihood of the major banks engaging in successful coordination,” Justice Halley said.

Further, the net public benefits test, including commitments made by ANZ to the state of Queensland, was also passed by the ACT. In the Tribunal’s estimation, Justice Halley said the merger would “constitute real and sustainable benefits to the state of Queensland”.

The Court did, however, conclude that both ‘counterfactuals’ presented by the ACCC – that is, Suncorp Group’s retention of its banking business and resumption of the status quo, or the proposed takeover by Bendigo and Adelaide Bank – are still “realistic” propositions. Nevertheless, the ACT did acknowledge challenges in the execution of a Bendigo Bank takeover, particularly concerning systems asymmetries.

ANZ chief executive Shayne Elliott welcomed the ACT’s ruling as a “significant milestone and an important step forward in the process”; though, he did note that the merging pair “still have still have further conditions to meet”.

“We remain committed to completing the acquisition as soon as possible once all sale conditions are met.”

Elliot added: “Suncorp Bank is a high-quality business with a strong team and excellent customer base, and we look forward to bringing them access to the best of ANZ, including our platforms and technology. We strongly believe that the acquisition presents significant opportunities for ANZ, Suncorp Bank and our customers, as well as major public benefits including for Queensland.”

Suncorp Group Chair Christine McLoughlin said the merger approval was “a big win for Queensland with both Suncorp and ANZ announcing significant jobs and investment packages as part of the bank sale process”.

The original merger bid, initiated by ANZ in 2022, was rejected by the competition watchdog last August in its final decision on the matter (which automatically pushed the dispute to the ACT). The ACCC at the time concluded that there was an increased likelihood of coordination between the four major banks in the supply of home loans if Suncorp became part of ANZ – a conclusion ultimately rejected by the Tribunal.

The sale of Suncorp Bank is still subject to legislative amendment of the State Financial Institutions and Metway Merger Act and final approval from the Federal Treasurer under the Financial Sector (Shareholdings) Act.

In a media release following the ACT’s decision, Treasurer Jim Chalmers said he would “carefully and methodically” consider the merger proposition under the terms of the Act.

The pair are expected to complete the formal merger process by mid-2024, should final approvals be received from both the Queensland and Federal Governments.