Why the ANZ-Suncorp merger appeal left us with more questions than answers
If there was substantial data on market power, merger benefits or competition in the ANZ-Suncorp merger hearings it was either redacted or heard behind closed doors.
Only once in two weeks of hearings in a competition review of ANZ's $4.9 billion play for Suncorp Group's bank did someone actually say KFC but there was more than enough time to skive off for junk food as heavily redacted documents were discussed or hearing doors closed.
There were plenty of assertions and counter-assertions presented in court but the data on detailed revenue, pricing and market shift analysis - if it exists at all - was not for public scrutiny. Those assertions covered the key issues of market definition and oligopoly power, merger synergies and the capacity to complete a transaction.
It came down to:
- Would the combination of the fourth and eleventh biggest market players in mortgages lessen competition or improve a new number three's ability to compete with the market leader?
- Is there a genuine "counterfactual" to the ANZ bid - which would provide core capital for Suncorp's desire to focus on insurance - and is that counterfactual Bendigo & Adelaide Bank?
- Do mergers actually create a more efficient institution or typically end in unfulfilled hope (as the competition regulators argued). And if they don't, what of Bendigo's argument its bid would deliver efficiencies allowing it to be a better competitor?
- Outside of competition in markets, are there broader public benefits - notably ANZ's promise to invest in particular projects in Queensland if it is successful?
A three-person panel conducting the Australian Competition Tribunal's review of the merger has until February 20 to decide whether the deal wouldn't substantially lessen competition in relevant banking markets; or the public benefit of the proposed acquisition outweighs the likely resulting public detriment.
