ANZ launches its appeal against the ACCC’s opposition to its proposed takeover of Suncorp Bank today before the Australian Competition Tribunal, where it will argue that the tribunal needs to consider the evidence and that “mere possibilities have no place in that analysis”. In August the ACCC announced that it had decided not to grant authorisation for the deal, saying that it was “not satisfied that in all the circumstances the proposed acquisition would not be likely to have the effect of substantially lessening competition” in core markets such as home loans, retail deposits and SME lending. In its consideration of the impact of the merger on the home loan market, the ACCC said: “While there is likely to be some lessening of competition arising the unilateral effects of the proposed acquisition, the ACCC consider it is unlikely to be substantial.” “However, there are some consequences of the proposed acquisition which mean that co-ordination is more likely. The most significant is that the proposed acquisition increases the symmetry between ANZ, Commonwealth Bank, NAB and Westpac.” “This is because the proposed acquisition closes the gap in market share of the home loan market between ANZ and the other three majors. While the increase in ANZ’s share appears small, it has a significant impact, moving ANZ into the position of the third largest bank in Australia. It moves ANZ closer to the other three major banks in terms of its asset and liability composition in key areas such as housing lending.” “Having regard to the importance of competition between the major banks in the home loan market, the significant cost and scale advantages they enjoy over other banks and the high barriers to entry and expansion, the competitive impact of any co-ordination between the major banks emerging would be substantial. “The proposed acquisition is likely to increase the incentives of the major banks to engage in co-ordination.” What the ACCC means by ‘co-ordination’ is: “Mergers have co-ordinated effects when they alter the nature of interdependence between rivals such that co-ordinated conduct is more likely, more complete and more sustainable. Co-ordinated effects may arise from tacit co-ordination that does not involve prohibited cartel conduct.” The ACCC said the markets where such co-ordinated activity are most likely to occur if the takeover goes ahead are home loans and deposits, and to a lesser degree SME banking and agribusiness banking. In response, ANZ’s application to the tribunal says: “The ACCC submissions repeatedly encourage consideration of the four major banks as a collective in the banking industry. That assumes away material differences between their competitive positions. “The proposed acquisition results in a de minimis increase in ANZ’s market share in home loans and is not likely to have a meaningful competitive effect in respect of SME or agribusiness banking, having regard to the fact that, in the future with the proposed acquisition, ANZ will remain constrained by other competitors. “The Tribunal is tasked with reaching a decision, on a vast evidentiary basis, about commercial matters under conditions of uncertainty. Mere possibilities have no place in that analysis. “If