Ensuring competitive markets key to merger reform: Government 

In a joint statement, Treasurer Jim Chalmers said: “The consultation paper examines whether current merger rules and processes are fit for purpose, enabling beneficial mergers while addressing those that could be anti-competitive.

“Any changes to merger settings would be about delivering greater benefits to the economy and to consumers and providing certainty to business. We want mergers to drive improvements in productivity, to put downward pressure on prices and to deliver more choice for Australians dealing with cost-of-living pressures.”

The government stated that the review and possible reform came at a time when “international evidence suggests current merger rules may be too permissive” and the Australian Competition and Consumer Commission (ACCC) has raised concerns about the nation’s merger regime.

The ACCC stated that the current regime was ‘skewed towards clearance” of mergers where there is uncertainty or several possible future outcomes, due to the emphasis courts place on needing to predict the likely state of competition in the future with and without the merger.

A consultation paper on the potential reform came as major lender ANZ and Suncorp Bank have applied for a review at the Australian Competition Tribunal after the ACCC decided to not grant authorisation for the big four bank’s proposed acquisition of Suncorp Bank.

In the review, ANZ argued that the incorporation of Suncorp Bank would not “substantially lessen competition in any relevant market”.

It stated that the acquisition of Suncorp Bank would not shrink the competition in the home loan market, as the ACCC accepted that the “recent price competition is intense and that ANZ, as the smallest of the major banks, is incentivised to compete”.

The major lender added that the growing number of non-bank lenders joining the home loan market was ensuring that there was sufficient competition.

“Banks take seriously the threat of competition and disruption from neobanks, fintech and big technology businesses such as Apple and Google and other non-bank lenders,” ANZ added.

“ANZ and other larger banks have invested significantly in developing and responding to innovation by traditional banks, neobanks, non-bank lenders, fintechs and big businesses.”

Brokerages continue to merge

The challenging economic climate has also seen an uptick in mergers on a smaller scale, with brokers predicting the necessity of evolution and economies of scale will see independent brokerages become rare.

Speaking to The Adviser on Friday (17 November), Peter Kennedy, director at Peter Kennedy Consulting stated: “It’s difficult as a small operation to have significant alliances and influence when required. If you operate on a relatively small basis, volume-wise, you won’t have much of a voice when trying to push for a better offering.

“Many lenders now won’t allocate BDMs to small operators and you’ll end up with a call centre solution, this then is difficult to build a great connection with many lenders.

“Many aggregators now are moving away from recruiting single operators as they know many will fail and the evidence shows this, they won’t waste their time in onboarding as the cost is too high.

[Related: Brokerages will continue to merge: Brokers]