Australia’s competition watchdog has intervened in a proposed deal that would have seen ANZ purchase the banking arm of Suncorp. The deal was expected to be worth $4.9 billion.
The Australian Competition and Consumer Corporation (ACCC) said the purchase could create a “substantial lessening of competition” among small to medium-sized banks in Queensland.
The ACCC’s powers:
The ACCC regulates competition between Australian businesses to make sure consumers are protected against unfair pricing or treatment.
The deal between ANZ and Suncorp could only happen with the ACCC’s approval.
This approval is based on two conditions: that the proposal won’t result in lessened competition, or carry an overall negative public impact.
The ANZ and Suncorp deal:
On Friday, the ACCC decided to not authorise the proposed deal.
It said smaller banks like Suncorp were important sources of competition for the big four banks in Australia (ANZ, CBA, NAB, and Westpac). This was especially so for small markets.
The ACCC was concerned that allowing a major bank to swallow up a smaller competitor would “further entrench” the dominance of the big banks.
Both ANZ and Suncorp said they were disappointed with the ACCC’s decision.
Suncorp Group Chairman Christine McLoughlin said they would refer the decision to the Australian Competition Tribunal for further consideration.
Further approvals will still be needed if the Tribunal reverses the ACCC’s decision, including a final sign-off from the Treasurer.