While the ACCC had said in August 2023 it would not grant authorisation for ANZ to acquire Suncorp’s banking business, citing competition concerns, the watchdog has now accepted that its opinions differ from those of the ACT.

Having had time to digest the full reasons of the tribunal in allowing the merger, ACCC chair Gina Cass-Gottlieb said: “While the ACCC reached a different conclusion to the tribunal, in complex cases that require the assessment of significant volumes of information and data, different decision makers can reasonably arrive at different conclusions.”

The ACCC added that it therefore does not propose to seek review of the tribunal’s decision to grant authorisation for ANZ’s proposed acquisition of Suncorp’s banking business.

“The availability of review of the ACCC’s merger authorisation decisions is an important check and balance for this administrative decision-making process,” Cass-Gottlieb said.

“The ACCC’s role in the review process is to assist the tribunal. In reaching its decision, the tribunal largely adopted the ACCC’s legal and economic framework for assessing the merger and its impacts, although ultimately formed a different view about the significance of the proposed acquisition on competition.”

The ACCC chair added that while the tribunal also shared the ACCC’s “fundamental concerns that the national home loans market has features which make it currently conducive to coordination”, it had found that many of the public benefits claimed by ANZ and Suncorp were “either not public benefits or were not specific to the proposed acquisition”.

Cass-Gottlieb said: “Banking markets are critical for consumers and businesses. The major banks have, for many decades now, been the same four banks with dominant market shares. For these reasons, the ACCC will continue to closely scrutinise these markets.”

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Brokers regularly repricing loans, boosting competition

In the tribunal’s full decision, the competitive edge that brokers provide the lending market were laid out in full.

The tribunal noted that there has been a relatively low propensity for borrowers to switch loans due to the costs and time involved, varying degrees of financial literacy, and cognitive and behavioural biases.

However, it flagged that John Campbell, the general manager of home loans in the retail division of ANZ, gave evidence that “brokers are regularly looking at their back books (customers for whom they have already arranged a loan) and where appropriate, ’instigate repricing activities on behalf of their customers’”.

“The tribunal accepts that, as a general proposition, brokers have reduced search and switching costs and facilitated price transparency for consumers,” it said.

“Whilst the ability for price transparency to facilitate price competition is limited by banks’ ability to provide unpublished discretionary discounts, the tribunal accepts that brokers can provide greater price transparency for individual consumers, and are a significant distribution channel for banks, particularly second-tier banks and other ADIs,” the full decision reads.

“The importance of access to branches and other physical networks as a facilitator of competition in the banking sector has declined since the expansion of online banking in the last two decades and other factors such as the increased penetration of brokers in some segments,” the tribunal decision document reads.

“Further, smaller lenders, digital-only and recent entrant lenders without the requisite physical networks rely heavily on broker distribution networks and aggregator panels to gain new customers and increase scale,” it later added, flagging that “brokers act as an intermediary by matching borrowers to lenders (and their loan products), assisting and advising borrowers on the loan application process and negotiating interest rates on loans” and “are under regulatory obligations to put the interests of their clients first”.

It continued: “A broker is able to provide a borrower with actual figures for comparative discretionary discounts offered by the major banks in circumstances where there is likely to be an alignment of interest between the broker and the borrower, not least because of the regulatory obligation on brokers to act in the best interests of their clients.

“Such an alignment of interests is less likely in a negotiation between a broker and a major bank where it could be expected that the broker would be pressing for a larger discretionary discount and would be providing information on other discretionary discounts in a manner that would tend to overstate rather than understate the availability and magnitude of those comparative discretionary discounts.”

The tribunal went on to say that it “accepts that brokers are performing an increasingly important role in the supply of banking products to SME customers”, suggesting that they currently originate approximately 40 per cent of SME business for banks overall.