ANZ’s barrister Ruth Higgins spent the day in the Australian Competition Tribunal setting out the bank’s argument that the ACCC’s reasons for blocking its acquisition of Suncorp Bank were based on “stale data” leading to “diffident non-satisfaction”.
The tribunal has scheduled nine sitting days to hear submissions from ANZ, Suncorp, the ACCC and Bendigo and Adelaide Bank.
Higgins zeroed in on a section of the ACCC’s reasons that said: “There is a long history of regulators and policy-makers identifying and seeking to address competition concerns in the banking sector, including reports from the Productivity Commission and the ACCC. These reports have found that the major banks’ market power is a defining feature of the financial system and highlighted significant concerns, including observations that there is an ‘accommodative and synchronised’ approach to pricing between the major banks.
“In the period since these reports were published, changes have occurred and there has been evidence of an increase in competition in home loans, including most recently through banks making increasing use of promotional and cashback offers. However, recent intense competition in home loans appears to have been short lived” she said.
Higgins said the ACCC’s view of what has occurred since the Productivity Commission and ACCC reports were done around five years ago ignores a number of significant developments that have increased competition.
These include: brokers’ growing share of loan writing; the increase in the number of bank and non-bank lenders; more widespread rate discounting; and fintechs developing new technology for challengers that gives them an advantage over big banks encumbered by legacy systems.
She said there was an increase in the number of home loan borrowers renegotiating or refinancing their loan, which was a more deep-seated change than the events surrounding the “fixed-rate cliff”.
She said another important development was the decline in the role of branches in maintaining the competitive position of the big banks.
Higgins pointed to confidential documents included in the bank’s submission that reveal serious concerns within the bank about the erosion of its competitive position as a result of these developments.
ANZ’s submission argues that current competition is not temporary but reflects longer term trends.
Throughout its submission, ANZ contrasts what it calls the ACCC’s “static” view of the market with its own “dynamic” view. One example of this is the decline in the big banks’ home loan market share, which has been around 1 per cent a year over the past 10 years.
While the ACCC characterised this change as gradual, the ANZ submission says: “Ten per cent is a material decline, particularly given the decline occurred in circumstances where the major banks have had to compete fiercely in an effort to retain and grow share.”