Price signalling headed for the shadows
Bank executives may have to restrain any commentary on price trends and opportunities, and their views of competitor conduct, with dedicated "price signalling" amendments to the Competition and Consumers Act that apply only to banks coming into force next month.
Rod Sims, chair of the Australian Competition and Consumer Commission, outlined high-level views of the ACCC over its approach to the revised law at conference on Saturday.
"We would be concerned if an Australian banking executive announced that he or she would be reluctant to lift rates beyond that of the Reserve Bank cash rate or introduce new fees, but they would follow if other banks did so," Sims said in a summary of remarks circulated by the ACCC.
"The ACCC's attention would be attracted where a bank offers its support for a change in pricing strategy, effectively tipping that strategy to competitors and testing how they might respond, without committing itself to action," Sims said.
Banks and the Australian Bankers Association pointed out in the course of debate over the new law a year ago that it was likely to curtail commentary by banks on matters of keen public interest, whether viewed broadly from the point of view of the mass of consumers or narrowly from the point of view of professional investment analysts.
Chief executives of banks have cited the new law (even though it is not yet in force) as a reason to decline to respond to investor and media questions at times over the last year.
Sims told the Competition Law Conference in Sydney that the new provisions, which take effect in a month, will, initially, apply only in relation to the taking of deposits and making advances or loans.
"Under the law, taking effect in June, it will be unlawful for a banking firm to disclose prices to competitors in private where doing so is not in the ordinary course of business," Sims said.
"But the ACCC thinks that statements that genuinely describe market reality are unlikely to raise concerns of anti-competitive conduct."
However, Mr Sims was quick to clarify what conduct would raise concerns with the ACCC.