Out of this world: ANZ attacks ACCC over Suncorp rejection

ANZ has fired its opening salvo in a Sydney courtroom at the ACCC’s decision to kybosh its $4.9bn deal to buy Suncorp Bank.

ANZ has fired a salvo at the Australian Competition & Consumer Commission’s rejection of its $4.9bn deal to buy Suncorp Bank, saying the risk it will reduce competition in the home loan market was as likely as a “meteor strike”.

At the start of a nine-day hearing before the Australian Competition Tribunal where it is challenging the ACCC decision, ANZ said the home loan market remained intensely competitive, marked by new home loan digital apps, mortgage brokers and discount offers.

Counsel for ANZ Ruth Higgins SC said the ACCC had strayed into “legal error” in deciding to reject the deal given the current state of the mortgage market where the big banks did not act as a “monolithic block” and faced a raft of smaller and more nimble competitors.

ANZ boss Shayne Elliott.

“There is intense competition among the major banks, including through their sub brands such as St George and Bankwest,” Ms Higgins told the tribunal, adding the aggregate increase in ANZ’s home loan market share would only be 2.3 per cent if the deal was approved.

“Acquiring 1.2 million additional customers from Suncorp Bank will allow ANZ to gain some benefits in terms of scale, but it will remain the smallest of the major banks and will continue to have to be price competitive.”

Ms Higgins said there had been significant changes in banking markets in recent years, including brokers that had facilitated “price transparency” for consumers.

She said the ACCC’s argument that it could not “rule out” the deal resulting in more co-ordination between major banks in key markets was fallacious.

“It invites legal error to apply the competition law in this way,” she said. “That one cannot rule something out, does not render it a reasonable competing hypothesis. I can’t rule out a meteor strike of this building today, but it is happily extremely unlikely.”

Ms Higgins said that consumers were increasingly using mortgage brokers to obtain the best deal on their homes loans and were well aware of their rights to switch banks.

“Customers are generally better informed about their ability to negotiate and renegotiate,” she said. “Eight out of 10 people are aware that they can renegotiate their home loan.

“There has been a significant increase in existing customers making inquiries about pricing. They’re able to readily compare home loan products and pricing on aggregator sites and are encouraged to seek out and improve loans by media, consumer groups and regulators.”

Ms Higgins said the ACCC contention that “co-ordination” between the major banks occurred to reduce competition was out of date given the rise of neobanks, greater regulation and faster approval turnarounds.

“It is fallacious and simply does not account for half a decade of dynamic competition in the banking industry.” she said.

ANZ said the aggregate increase in ANZ’s home loan market share would only be 2.3 per cent if the deal to buy Suncorp Bank was approved.

The major banks were deeply concerned about the “threat of expansion and disruption” from smaller banks, non-bank lenders and Macquarie Bank.

“Macquarie’s recent rapid growth had involved it almost tripling its market shares since 2016 without any branch network,” Ms Higgins said, adding other smaller competitors included Pepper Money, Liberty Financial Group and Firstmac.

She said the four major banks held “relatively asymmetric” market shares, with Commonwealth, Westpac holding a much larger proportion than ANZ and NAB.

“CBA has been growing its market share while Westpac and NAB have lost market share,” she said. “The four banks are also differentiated in non-price attributes that are important to competition, including turnaround time from application to loan decision.”

Banks also were focused on different customer segments, and their incentives varied depending on the size of their retail and business portfolio.

The tribunal has set aside almost two weeks to hear why it should overturn the ACCC decision and will make its decision no later than February 20. The ACCC, Bendigo Bank and Suncorp are due to give their evidence in the coming days.

The takeover appeal is being heard before three of its members: deputy president and Federal Court justice John Halley, former ACCC commissioner Jill Walker, and Keypath chair and Domain director Diana Eilert.