Competition Analysis of Bank Mergers in Australia

This paper reviews the competition analysis of bank mergers in Australia, a regulatory task that is undertaken by the Australian Competition and Consumer Commission (ACCC) under the Trade Practices Act 1974 (Cth), s 50. As a preliminary step, some background is provided on ACCC merger assessment procedure. This is followed by a discussion of the three most significant bank merger investigations undertaken by the ACCC, including the ACCC's most recent and comprehensive investigation into the Commonwealth Bank of Australia's acquisition of Colonial Limited. Five major themes running through these investigations are then identified and discussed. The five themes include: the use of market share thresholds and analysis of coordinated conduct by the ACCC; market definitions, especially the impact of electronic banking and convergence on definitions; contestability and entry barriers in retail banking; the importance of regional banks in promoting competition; and the nature of competition remedies accepted by the ACCC. Some brief observations on the implications of all of this for future bank mergers are then presented by way of conclusion.