A merger that involves a change of control of a financial institution must satisfy a number of regulatory requirements including the merger tests in the Competition and Consumer Act 2010.
The Australian Competition Tribunal has found the proposed acquisition of Suncorp Bank by ANZ Group Holdings Ltd meets the criteria of the Competition and Consumer Act 2010, setting aside the Australian Competition and Consumer Commission’s 2023 decision not to grant authorisation for the proposed acquisition.
Subject to a Federal Court review of the Tribunal decision, ANZ now requires further approval from the Treasurer under the Financial Sector (Shareholdings) Act 1998 whether the proposed acquisition is in the national interest.
On 4 August 2023, the ACCC said it would not authorise the proposed acquisition, because it was not satisfied the transaction would not result in a substantial lessening of competition in the supply of home loans nationally, small to medium enterprise banking in Queensland, and agribusiness banking in Queensland, and that the claimed public benefits did not outweigh the likely public detriment.
The ACCC was concerned that the proposed acquisition of Suncorp Bank by ANZ would further entrench an oligopoly market structure that is dominated by the four major banks.
Based on its review of the material before the ACCC, and some limited new information, the Tribunal has concluded that it is satisfied that the transaction would not result in a substantial lessening of competition in any relevant market.
The Tribunal was satisfied that the proposal represents a net public benefit because any detriments arising from any reduction in competition are unlikely to be sufficiently certain and significant to outweigh the more certain integration and productive efficiencies forecast to arise from the proposed acquisition.
The four major banks collectively account for 72% of reported banking system assets in Australia. The second-tier banks each have a share of banking system assets greater than 1%, and collectively account for close to 14% of reported banking system assets, having increased their share of assets over the past decade. Other ADIs individually hold a share of banking system assets of less than 0.7%, which includes foreign bank branches, which primarily target niche areas, and credit unions and building societies. Non-ADI lenders account for around 5% of total financial system assets in Australia. Non-ADI lenders include smaller financial technology providers, which can be broadly described as “fintechs”
The Tribunal 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 of likelihood of the Major Banks engaging in successful coordination.
In addition, the Tribunal decided that other recent significant changes to the home loans market around brokers, the increased use of technology, and consumer behaviour have reduced the risk of coordination.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
