ANZ share price higher despite ACCC blocking Suncorp Bank acquisition

The ANZ Group Holdings Ltd (ASX: ANZ) share price is rising on Friday.

In morning trade, the banking giant’s shares are up 1.5% to $25.65.

Why is the ANZ share price rising?

Investors have been hitting the buy button despite the Australian Competition and Consumer Commission (ACCC) blocking ANZ’s proposed acquisition of the banking operations of Suncorp Group Ltd (ASX: SUN).

This may be a sign that some investors weren’t overly keen on the plan.

Why was it blocked?

The competition regulator advised that under the statutory test, it must not grant authorisation unless it is satisfied in all the circumstances that the proposed acquisition would not be likely to substantially lessen competition, or that the likely public benefits would outweigh the likely public detriments.

ACCC’s Deputy Chair, Mick Keogh, wasn’t convinced that the acquisition would not substantially lessen competition in the supply of home loans nationally, small to medium enterprise banking in Queensland, and agribusiness banking in Queensland.

Keogh revealed that the ACCC was concerned that less competition in these markets could impact customers. He explains:

These banking markets are critical for many homeowners and for Queensland businesses and farmers in particular. Competition being lessened in these markets will lead to customers getting a worse deal.

Second-tier banks such as Suncorp Bank are important competitors against the major banks, especially because barriers to new entry at scale into banking are very high. Evidence we obtained strongly indicates that the major banks consider the second-tier banks to be a competitive threat.

Keogh also advised that the ACCC felt that the proposed acquisition would further entrench a market dominated by the big four banks. He adds:

The proposed acquisition of Suncorp Bank by ANZ would further entrench an oligopoly market structure that is concentrated, with the four major banks dominating. It also limits the options for second-tier banks to combine and strengthen in a way that would create a greater competitive threat to the major banks.

And while the ACCC accepts that there will be some public benefits from the potential acquisition, they are not enough “to outweigh the likely significant detriments to competition in banking markets that have the potential to impact many Australian households and businesses.”

The Suncorp share price is down 3% on the news.