Why ANZ must beat inept ACCC

The ACCC decision to black ANZ’s acquisition of Suncorp bank is an embarrassingly awful decision - reflecting gross regulatory ineptitude and an inability to understand the law.

The ANZ really does have to appeal – and even more importantly, win – against the ACCC ban on its acquisition of Suncorp.

It is just such an all-round embarrassingly awful decision - reflecting gross regulatory ineptitude, and an inability to even understand the law the ACCC is supposedly charged with enforcing, to say nothing of the most basic realities of both economics and business.

Deputy chair Mick Keogh, who has carriage of the decision, really should resign – in embarrassment - or be sacked, when, if there is any logic and basic legal competence still around, the ANZ wins its appeal.

Now clearly, a lot of people out there are delighted to see a big bank given a ‘black eye’.

But do they really think that if this decision is sustained, suddenly and for evermore, a hundred competitive banking flowers will bloom?

As opposed to the dark shadow of “co-ordination” between the big four banks – a new term that Keogh has grasped like a toddler with a new toy – blighting forever the banking competitive landscape?

ACCC deputy chair Mick Keogh. Picture: Adam Taylor

Anyone who thinks the big banks don’t compete – compete, yet, it is also true, to screw especially depositors, as well as to lure customers with beneficial offerings – hasn’t been paying attention, for, something like around 25 years now.

It’s the same with the big two supermarket chains – which have comprehensively shredded this new “co-ordination” toy that the unfortunate Keogh has grasped to his bosom.

According to the theory – indeed, even more so in their case, as there are only two of them as against the four big banks in their space - they would have spent that last 20 years lazily “co-ordinating”.

That is, instead of what they did do, year after year - aggressively cutting prices and chasing customers.

Exactly the same has happened in both the home loan and SME business spaces in banking. The ACCC provides zero evidence of big banks “co-ordinating”, because there is none.

Indeed, the ACCC’s own expert, chosen to “independently” assess the merger, was unable to conclude that it would be sufficiently anti-competitive in regard to home loans to justify rejection.

Just “reducing” competition is not enough for rejection; it has to be likely – not, to emphasise, arguably or possibly, but likely - to “substantially lessen competition” under the legislation.

The expert, British economist Mary Starks, wrote, and I quote, there was “no real chance” of the merger lessening home loan competition even under her pet co-ordination theory.

You only get to her – and the ACCC’s – “cannot rule out substantially lessening home loan competition” by assessing this proposal against a fantasy alternative merger of Suncorp and Bendigo.

What Keogh embarrassingly doesn’t seem to understand is that the legislation does not empower the ACCC to assess a proposal against a fantasy alternative.

It has to be against current reality. One would hope the appeal body understands this.

Indeed, Starks herself fundamentally and fatally undermines both her own theory of “co-ordination” and the specific argument of big bank co-ordination – the whole basis of the rejection - by noting co-ordination “appears currently to have broken down”.

Gee. So something, “independently assessed” as non-existent, is the basis of the ACCC decision?

Just, embarrassing.

Originally published as Why ANZ must beat inept ACCC