Competition serves consumers well. The theory which is confirmed in the real world suggests that the more businesses or enterprises are out there in the marketplace seeking the consumer dollar the cheaper the price for that commodity.
The cheaper the price, the better off the consumer, all other factors being equal.
The saved dollars could then be spent elsewhere in the economy providing further jobs and stimulus.
Most Australians would correctly observe that their banking sector is an oligopoly.
There are four major players which control the market. The big four—Commonwealth Bank, Westpac, National Australia Bank, and the ANZ—hold a very significant share of banking business in Australia.
Their profits are substantial and their customer service is ever-diminishing.
The growth in community banking is significant but recourse to the four big banks is often needed for the bigger deals, so the other banks are treated more as an annoyance or a quaint player in the financial sector.
The threat from other sources to the oligopoly is of nuisance value and little else.
The Australian public is eager to see all minor players in the financial sector remaining viable. So the decision by the Australian Consumer and Competition Tribunal to allow the merger of ANZ and the banking arm of Suncorp will be a disappointment to many.
The Australian Consumer and Competition Council (ACCC) had previously in July 2022 denied the proposed merger/acquisition. On appeal, the Tribunal determined otherwise in relation to this $4.9 billion deal.
There is no doubt that in the foreseeable future, a merger of this nature will reduce competition.
Yet the Tribunal determined that the overall public benefits would outweigh the public detriment.
What this tells all Australians is that different bodies confronted with the same circumstances can come to substantially different conclusions.
Applying the same principles as prescribed by laws made in the Australian Parliament, the Tribunal over-rode the decision of the ACCC. These decisions are never black or white.
The Tribunal found that competition would be lessened but not “substantially.” It acknowledged there was public detriment in the merger but that was outweighed by the other esoteric test of the public benefit.
Lots of value judgments and subjective assessments remind us that men and women of good faith can disagree with each other and come to vastly differing findings and conclusions on the same statement of facts.
Hard Task Ahead for Chalmers
But this 18-month saga has not yet ended as there will need to be enabling legislation in the Parliament of the State of Queensland.
Further, the federal Treasurer Jim Chalmers has to determine for himself as the federal Treasurer whether the proposed merger is in the national interest. And that too will be a controversial determination.
The national interest test leaves substantial latitude to the treasurer to make up his mind and potentially substitute the decision of the Tribunal.
Should the treasurer veto the merger, most Australians will be cheering from the sidelines. Their prospective cheering may sway the treasurer, as will his desire to present himself as capable of making tough decisions, and be an economic rationalist.
One assumes the basis for any ministerial intervention will be wrapped up in cotton wool to protect a certain element from facing the strict laws of economics, and the harshness of competition.
In the meantime, the people will face a diminished team and less activity.
No matter how you look at the merger proposal, any concession will be subjective and will need to be considered carefully.
Suncorp (the business the subject of the proposed acquisition) has serviced home loans, businesses generally, and in particular the agri-business sectors.
Australia needs tribunals and government ministers who are willing to ensure the full protection of the consumer, and the wealth producers and job creators.
No matter which way the treasurer decides he will be widely criticised. That’s one thing on which we can all bank.
