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• MPA Online

The Australian Competition and Consumer Commission's analysis of the CBA-Bankwest merger has been widely misunderstood, according to ACCC chairman Graeme Samuel.

In an opinion letter to the AFR, Samuel defended the ACCC's decision to allow the merger to go through, stating that commentators on competition in the sector fail to fully appreciate the "cataclysmic impact of the global financial crisis on the sector's competitive structure". 

With regard to the CBA-Bankwest merger, Samuel said that the ACCC found that prior to the GFC, Bankwest had been a vigorous competitor in WA and was aggressively expanding into the eastern states.

But Samuel noted that its competitive strength relied on funding from its UK parent HBOS which, due to the crisis, was in substantial financial difficulty.

"Following inquiries with regulators, HBOS, and Australian and overseas banks (including those initially approached by HBOS in relation to the sale), the ACCC concluded that an alternative buyer for Bankwest was unlikely and its competitive model was not sustainable. Accordingly, the ACCC did not oppose the merger."

Samuel also defended the regulator's analysis of the Westpac-St.George merger which preceded the onset of the GFC.

According to Samuel, the ACCC concluded the merged entity would face competition from regional banks, CUBS and the other three majors.

"St.George was not considered to be a key driver of competition in terms of price, product development or innovation, and the ACCC found the acquisition would not be likely to substantially lessen competition."

The latest proposed merger to come under the ACCC spotlight is the acquisition of Axa by AMP or NAB.

Related stories:

ACCC questions Westpac/St.George decision - ACCC chairman Graeme Samuel has admitted that the timing of the Westpac/St.George merger might have influenced the regulator's decision

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