The Consumers’ Federation of Australia (the CFA) has labelled the proposed ANZ-Suncorp merger a “tipping point” in eliminating effective competition among Australia’s banks.
In a submission to the Australian Competition & Consumer Commission (the ACCC), the CFA says that if the ANZ-Suncorp merger is approved, there will be no limits on further bank mergers resulting in an even more concentrated banking market. This will result in increased bank profits, more expensive banking products, as well as poorer and less accessible services, to the detriment of Australian consumers.
“The ACCC should oppose this merger as it is likely to substantially lessen competition”, said CFA Chair Gerard Brody.
“In its previous reports on Australia’s banks, the ACCC has said that the big four banks are an ‘oligopoly’ and that they use pricing strategies to accommodate rather than challenge rivals. This confirms that the big four banks really operate as one, and we need strong second-tier banks to offer competition. In light of its previous findings, the ACCC really has to oppose this merger”.
The CFA submission provides analysis about the Australian banking market, including the role of second-tier banks and so-called ‘neo’ or ‘digital’ banks.
“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.
“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”, said Mr Brody.
The CFA also states that:
- consumers face significant barriers to exercising choice, notwithstanding reforms like the Consumer Data Right which has suffered from low uptake;
- ANZ’s commitment to not close Suncorp branches in Queensland is meaningless, and will not stop the merger resulting in closure of branches overall; and
- the current inflationary environment provides companies with market power the opportunity to exploit that power, meaning that they can more easily increase prices in a coordinated way.
The ACCC is accepting submissions during January, and will make its decision by 12 June 2023.
CFA’s submission is available for download here.
For further comment: Gerard Brody, 0415 223 211
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