Consumer groups label ANZ’s Suncorp Bank takeover ‘a disaster’ for competition

The Consumers Federation of Australia says removing Suncorp’s independence heightens the risk of co-ordinated bank conduct.

The proposed marriage of ANZ and Suncorp’s bank would “materially increase” the risk of co-ordinated bank conduct across products, by removing a competitor and effectively making it easier for other mergers, consumer advocates warn.

In a submission to the competition regulator, the Consumers Federation of Australia said it was opposed to ANZ’s $4.9bn takeover of Suncorp Bank because it would dent competition.

“Removing Suncorp Bank from the marketplace leaves us with the foregone conclusion that the other remaining second-tier banks can be acquired by the four majors. It is a disaster for effective competition,” CFA chair Gerard Brody said.

“Also, the newer digital banks, that were supposed to challenge the banking oligopoly have either been gobbled up by the big banks or closed their doors.”

Consumers Federation of Australia chief Gerard Brody. Picture: Stuart McEvoy

The CFA is the peak body for Australian consumer organisations. Its submission to the Australian Competition and Consumer Commission comes as the regulator assesses the deal with a view to making a decision in June on whether it impinges on competition.

While ANZ and Suncorp have said the transaction creates a larger bank that is better able to compete against the other majors, well-respected analyst Brian Johnson this week added his concerns to the debate.

Mr Johnson called for the takeover to be blocked because it would damage competition, also noting if that happened it raised the prospect of a share-buy back or a change of focus to acquisitions outside banking.

The CFA submission argued that if the acquisition of Suncorp’s bank was able to proceed it would be detrimental to consumers.

Banking analyst Brian Johnson has called for the takeover to be blocked.

“Numerous reports, including from the ACCC, as well as our observations, lead us to conclude that the big four banks are an oligopoly and operate largely as one. Competition between the big four banks is ineffective,” it said.

The submission highlighted the CFA’s view that Macquarie Bank, the nation’s fifth largest, does not compete directly with the four majors, instead targeting high net-worth customers.

“Three second-tier regional banks — Suncorp Bank, Bank of Queensland, and Bendigo and Adelaide Bank — provide some competitive pressure for the big four. We consider that removing any of these three will substantially lessen competition,” the submission said.

“Each retains extensive branch networks (particularly in regional communities) and offers a full-service alternative to the big four banks.

“International banks offer limited competitive pressure.”

It also noted that to reach the scale of one of the big four banks, about 20 other players in this market would need to merge.

The ACCC is using compulsory powers to compel rival banks to provide it with detailed information about industry pricing, marketing, technology and customer switching, as it makes its assessment of the ANZ and Suncorp bank tie-up. The deal requires ACCC sign-off as well as approval by the federal and state governments.

The CFA’s submission outlined “a range of public detriments” it said arose from the proposed acquisition including accessibility of banking, and the deal’s impact on inflation.

“Ineffective competition and the existence of market power can contribute to high prices,” the submission said.