ANZ is hanging its hat on the Australian Competition Tribunal agreeing that Bank of Queensland, Judo Bank, Bendigo and Adelaide Bank and Rabobank will provide meaningful competition in business banking, should the Tribunal overrule the ACCC and clear the way for ANZ to buy Suncorp Bank.
In the second day of the Tribunal’s review of the ACCC’s refusal to authorise the merger, ANZ’s barrister Ruth Higgins focused her analysis of the expert opinions provided to the ACCC and the Tribunal – including those of Bendigo, which is waiting in the wings to make an alternative offer for Suncorp Bank.
Reflecting on the likelihood that the takeover would reduce competition for SME customers, Higgins said “there is no reason that gap could not be filled by BOQ or Judo.
“Those entities have stated they intend to grow in SME and provide these services.”
Bendigo also has relationship managers “that cover all of Queensland”.
Higgins also walked the Tribunal through the proper assessment of “geographic boundaries” of relevant SME and agribusiness product markets.
"We say the relevant market is a national banking market," she said.
“Products are provided nationally.
“Pricing usually is national, [but] can be [modified] on a case by case basis.
“The ACCC asserts that agribusiness knowledge is local. We submit that is a fundamental mistake.”
Both Mary Starks (one of two ACCC experts) and Stephen King (one of Bendigo’s experts) have argued the relevant markets for competition analysis were “local/regional agribusiness banking markets, particularly those local/regional”; this phrase lifted from King’s most recent report prepared for this hearing.
Higgins repeatedly drew the Tribunal’s attention to conclusions in Starks’ second report that an ANZ-Suncorp merger may not lead to any “substantial lessening in competition”.
There is, she said “the possibility of entry at scale, depending on the circumstances of the competitor.”
Higgins attacked King’s opinion that “compared to the status quo counterfactual, the acquisition of Suncorp Bank by ANZ will lead to a substantial lessening of competition”.
Agribusiness and SME bankers, she said, “balance risk by lending to different customers in different industries and regions.
“Contrary to the ACCC, the evidence suggests that a lender in one area is more likely to lend in another area” in order to drum up attractive business and balance risk in the books for which they were responsible.
“A local presence is not necessary to compete for SME and agribusiness customers. Bankers can travel.”
Portraying the ACCC’s analysis as weak, Higgins emphasised that the ACCC’s conclusions – which they said were “finely balanced” - must be undermined by Starks’ inability, in her second report, to reach definitive conclusions around a lessening in competition.
Starks, Higgins conceded, did not rule out the chance there would be a lessening in competition.
“But it is not likely” she contended.
“The vast majority of SME customers are not served by branches.
“The ACCC found one of the greatest barriers to competition was personnel. Whether it can gain skilled workers and maintain relationships with agribusiness customers.
“ANZ is likely to be constrained by NAB and Rabobank.
“We submit that when all the evidence is reviewed, competition for agribusiness is vigorous, whether looked at nationally, or local.”
Further “the broker channel is likely to increase.
“ANZ will be constrained by the threat of new entry and expansion.”
The hearing resumes on Thursday.