The ACCC has decided not to grant merger authorisation for
Under the statutory test, the ACCC must not grant authorisation unless it is satisfied in all the circumstances that the proposed acquisition would not be likely to substantially lessen competition, or that the likely public benefits would outweigh the likely public detriments.
"We are not satisfied that the acquisition is not likely to substantially lessen competition in the supply of home loans nationally, small to medium enterprise banking in
"These banking markets are critical for many homeowners and for
"Second-tier banks such as
"The proposed acquisition of
The ACCC today released its determination and an executive summary of its reasons. The full reasons will be released Monday following confidentiality checks with relevant parties.
Increased likelihood of coordination in Australian home loans market
"We are not satisfied that the acquisition is not likely to substantially lessen competition in the supply of home loans to Australian consumers,"
"We consider there is an increased likelihood of coordination between the four major banks in the supply of home loans should
"A substantial lessening of competition in home loans would have major flow-on impacts to Australians with a mortgage. More than a third of Australian households have a mortgage, with loans totalling around
"The proposed acquisition increases the likelihood that the major banks adopt a 'live and let live' approach to each other, aimed at maintaining or protecting their existing market shares. This is instead of competing strongly on price, innovation and the quality of their service and products to win customers."
The ACCC considers the Australian home loans market is already at risk of coordination between the major banks for a number of reasons, including banks' ability to price signal, the similarities of the major banks in terms of size and structure, the stability of the existing market structure and high barriers to entry.
"While there is evidence of increased competition in the home loans market recently, including in the form of cash-back offers to consumers, we are not persuaded that this level of competition will continue,"
"We note recent commentary by bank chief executives that they are stepping back from aggressive promotions. If this market was truly competitive, we would not expect to see banks publicly flagging plans to reduce the competitiveness of their offerings."
The acquisition of
"If ANZ doesn't acquire
"The acquisition by ANZ would also remove the potential for a
Small and medium business banking in
"Our assessment found that the supply of small to medium enterprise banking services in
"We are not satisfied there would not be a likely substantial lessening of competition in small to medium-sized business banking in
"
Agribusiness banking in
"We found agribusiness banking to have a strong local focus, with bankers typically visiting farmers and developing a detailed understanding of their requirements. We found agribusiness customers value specialised banking services with local knowledge and industry expertise,"
"
"Agribusiness banking services in
The ACCC is not satisfied there would not be a likely substantial lessening of competition in agribusiness banking in
The potential of
In order to assess the competitive impact of a proposed acquisition, the ACCC considers the likely future state of competition with and without the proposed acquisition.
"In considering the likely outcomes if ANZ does not acquire
"
Whether or not
The ACCC assessed the issue of a potential
"After undertaking this intensive assessment, the ACCC considers that there is a realistic prospect of a
"While we are not saying such a merger between
Public benefits
The ACCC accepts that ANZ would benefit from cost savings from the proposed acquisition and that
However the ACCC considers that those benefits do not outweigh the likely detriments, particularly competitive detriments likely to result from the proposed acquisition.
ANZ has also claimed benefits to
"Based on a recent determination from the
"After taking into account all of the claimed benefits we are not satisfied they are enough to outweigh the likely significant detriments to competition in banking markets that have the potential to impact many Australian households and businesses."
Notes to editors
Under the Competition and Consumer Act, the legal test the ACCC must apply in an application for merger authorisation is different to the informal merger review process, which is the most common avenue merger parties use to seek the ACCC's views on a proposed acquisition.
Under the statutory test for authorisation, the ACCC must not grant authorisation unless it is satisfied in all the circumstances that the proposed acquisition would not be likely to substantially lessen competition, or that the likely public benefits would outweigh the likely public detriments.
More information on the different legal tests can be found in the ACCC's Merger guidelines.
Details on the process for a merger authorisation assessment can be found here: Merger authorisation guidelines.
Authorisation decisions by the ACCC can be appealed to the
Background
On
The ACCC issued a statement of preliminary views on
The proposed acquisition involves ANZ acquiring the banking arm of
The ACCC sought the views of a range of interested parties including providers of banking and financial services, consumer organisations, and brokers and aggregators.
Submissions and expert reports are available on the ACCC's public register, except if information has been excluded for confidentiality or other reasons.
In addition to the ACCC's review, the proposed acquisition is subject to Federal Treasurer approval under the Financial Sector (Shareholdings) Act and
.
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