Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Aspects of bank mergers

CHAIR —I welcome representatives of the ACCC. I remind members of the committee that the Senate has resolved that officials shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions to superior officers or to a minister. This resolution prohibits only asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted. Do you have an opening statement that you wish to make?

Mr Grimwade —We are here to answer your questions, but I would like to note that there are a number of submissions that make reference to suggestions, issues and recommendations that pertain to the ACCC. If it is possible, I would not mind having the opportunity to comment on those, perhaps at the end of the questioning, if your questions do not give us an opportunity to address those issues.

CHAIR —With the agreement of the committee, why don’t we do it now, because one focus of our questions would be your response to those suggestions?

Mr Grimwade —Sure. The first issue I would like to address is in relation to some recommendations made by CHOICE and the Finance Sector Union. They relate to the merger review process of the commission and, in particular, a recommendation or a suggestion that the commission make public submissions that are made to the commission in a merger review process, subject to some caveat for reasonable confidentiality requests.

CHAIR —I think it was ‘unless there is any pressing reason’, or something of that nature.

Mr Grimwade —Something to that effect. This might go to Senator Furner’s questions in relation to a survey that we can get to down the track. I would like to comment that the success and the reputation of the commission’s informal merger review process is critically dependent on the ability of merger parties and interested parties being able to submit their views to us in confidence. We have a policy in the informal merger review process that we do not reveal any communications made to us, to the extent that they are confidential. There are a number of reasons for this. One is that often information that is put to us does contain commercially sensitive information—that is obvious. But we often have people talking to us who are concerned about possible retribution by merger parties, we have people talking to us who might be subject to influence by merger parties or other parties if their submissions or identities are known, and we have a general policy that submissions made to us in that process are confidential.

Having said that, we have been trying for about four years to enhance the transparency of our processes. Indeed, following on from the Dawson committee, we have now enacted a process where we issue public competition assessments, which are comprehensive statements of our reasons for major merger matters, where we try to explain as best we can, without compromising the confidential submissions put to us, the reasons for our decisions. If merger parties or interested parties had any doubt as to the commission’s ability or willingness to maintain confidentiality, we are of the view that the informal merger clearance process would really be of no use to them. It has been a very successful process. It allows us to be efficient, responsive and effective in blocking anticompetitive mergers before they happen, or clearing mergers that are not anticompetitive before they happen.

Senator FURNER —On that point of confidentiality, at no stage did I or anyone on the committee request the names of the recipients of the survey. Naturally, you would be in a position to provide the detailed summary of the outcome of that, without disclosing the recipients.

Mr Grimwade —If I could perhaps make some remarks about the survey, because it is quite important that it is not seen for what it appears to have been portrayed as. I regret now that it was called ‘a survey’, because really it was a mechanism by which we were trying to get consumers and small businesses to engage with us in our usual market inquiry process. So instead of sending out 250 letters to consumers with a list of questions, we devised a survey with a number of questions and opportunities for them to make comments online. It was made quite clear at the beginning of the survey that, ‘Your submissions will be protected. We will not disclose them. They will be treated as confidential, as is any other market inquiry.’ We appreciated that this so-called survey was going to be biased. Those who would self-select into giving us their responses had a reason to engage with us on the merger.

We had never intended to portray it as a survey from which you could infer to the general population some empirical findings. Rather, it was like any other market inquiry that we make of consumers and business, merger parties, unions, industry representatives, government and so forth. It was designed really to give us a better idea of the sorts of issues that we should be focusing on as we progressed our inquiries and, indeed, the sorts of questions that we should be asking the merger parties and the sorts of documents that we should be requesting from the merger parties.

We did remark upon what was beneficial from the survey in our public statement. One of those issues was, for instance, that we found that consumers largely used bank branches for transaction accounts. So we pursued that line of inquiry with the banks and we examined their confidential information that they were able to give us to reinforce a finding that, for transaction accounts, the market in which we examined the competition effects was local, whereas we found other markets—home loans, wealth planning, insurance and some others—were national markets. So it did no more than that.

There were two concerns about us being requested to release or reveal the surveys. One was my first point—that we have a general policy to protect information that is confidential, particularly when we say at the outset, ‘The information you’re providing us will be kept confidential.’ Secondly, we were concerned that the survey might be misrepresented by those who obtained it to infer some general findings across the community, which was never its intention. I should say that there is nothing stopping anyone who makes a submission to the commission from publishing or publicising their submission themselves, but as a policy we do not do that.

CHAIR —I think that is precisely the FSU’s point. They are saying that they often publish their own submission. I guess they are encouraging the ACCC to ask if other groups would be prepared to have their submissions published, so it would not be a matter of breaching confidentiality. But, if people were happy to have their submission published, then they should be published.

Mr Grimwade —Yes. Section 50 is a law of general application and our process has a set of enshrined principles that we apply across every industry sector. If you are going to make a particular position in relation to encouraging people to make public their submissions, that is something you would have to do across every merger.


Mr Grimwade —I would advocate against that. One of the real benefits of our process is that people trust implicitly that we will not reveal anything that comes to us, to the extent that it will compromise whatever view that we are getting to. The point I would make in respect of that is that in some cases it is not necessarily in an interested party’s interest to publish their views at a particular point in time, when that interested party might actually be subject to some influence by a merger party down the track. So if we end up having a problem and wishing to take it to court, it might be that that party is not prepared to become a witness. There are all sorts of factors, I think, that impinge on a policy that does not advocate for us protecting confidentiality completely.

CHAIR —Please then, Mr Grimwade, continue on.

Mr Grimwade —This is probably a smaller point but I will make it anyway for the record: there was a criticism by CHOICE that we had used double standards or a contradictory approach in our public competition assessment because we made broad reference to the survey but did not release the survey to CHOICE or publicise the submissions. Our view is that that was a completely consistent approach to take. As I said from the outset, we try to be as transparent and comprehensive in our reasons as possible and, to the extent we can do that without compromising confidentiality or revealing confidential information, we will do so. That was the first issue I was going to raise.

There are one or two others I will just remark upon. I think the Finance Sector Union, and maybe CHOICE as well, made some reference or recommendation that the commission be responsible for monitoring and enforcing conditions that the Treasurer might impose under the Financial Services Shareholding Act. Our view is that that might confuse the commission’s independent role in terms of its competition enforcement and review of the merger, or any merger that comes before it. We have a process where we might reach a view that we will impose our own conditions, and we think it might be inconsistent and inappropriate for us to then be monitoring and enforcing a set of potentially separate and potentially inconsistent conditions that we were not involved in making. So I just make that point.

The third issue that I would not mind remarking upon—and it was raised just before by the Finance Sector Union and it is also in their submission, and you might wish to ask more about this down the track—is that section 50 be subject to a different test. It was not quite clear in the submission whether this would only apply to bank mergers or whether it would apply generally, but there would be some public benefit assessment which would include, I think in their words, a social audit. Our view is that that, if my understanding of what they are proposing is correct, would really turn section 50 on its head because at present, and for many years—and I mean it is consistent internationally in merger law—section 50 prohibits substantially anticompetitive mergers.

In Australia it is possible that an anticompetitive merger can be authorised if that anticompetitive merger is in the net public interest, net public benefit. But it seems to me that what is being proposed is that, even if a merger is not anticompetitive—it might be competitively neutral, it might be pro competitive—there would still need to be some public benefit assessment or social audit conducted, and the commission would be put in a position where it might seek to oppose or have to require conditions to be attached to that conceivably pro-competitive merger because it did not pass some social audit.

We would not advocate that as an appropriate amendment to section 50. I would also add that, if the proposal was in respect of banking mergers, there already is a separate public interest test applied to banking mergers and it is done under the Financial Services Shareholding Act, under the Treasurer’s national interest test.

CHAIR —And when is that done in the process?

Mr Grimwade —I am not an expert on this, but I believe it comes after any decision by the commission. I am not exactly sure of the timing, but it was referred to before. It is in relation to the sorts of conditions that the Treasurer might impose in respect of a particular merger, and I think that in Westpac-St George there were a number of conditions that were imposed by the Treasurer under the national interest test. I think that is correct.

CHAIR —I am sorry, I still do not have that clear. So there is a merger proposal, it is considered and—

Mr Grimwade —Sorry. My point is that section 50 stands alone as a competition provision and a competition test and that is the way the commission deals with it. In bank mergers, separate to the commission’s involvement, there is a test where national interest considerations are had regard to under a separate act by the Treasurer, and the Treasurer can impose conditions under that act. It is completely divorced from our involvement. But what I am saying is that it is not true to say that there is no public interest test applied to bank mergers, because there is.

CHAIR —Okay. So if there is a bank merger consideration, the Treasurer can separately look at that public interest test under a different act. I am interested to know how they impinge on each other; where in the process.

Mr Grimwade —They do not impinge on each other. To be completely correct, I believe it is a national interest test rather than a public interest test.

CHAIR —If the Treasurer separately finds that it is not in the national interest to do something, but under section 50 it is approved, how is that reconciled?

Mr Grimwade —You should probably verify this with Treasury, but my understanding is that the Treasurer could override, just as I think the Foreign Investment Review Board can override, any informal position that the commission might have in respect of a merger under those respective pieces of legislation.

The commission’s decision in respect of a merger is taken under what is called an informal review process. There is actually no statutory requirement or prescription of a process by which the commission is to clear a merger. It is something that has evolved and it has evolved because we do not have any requirement on companies to come and notify us of mergers before they happen. So we have essentially constructed a system which incentivises parties to come to us before they merge to seek a view, and in many cases they will get a degree of comfort from our position that we will not intervene. In some cases we will say, ‘Yes, we have a problem and we will intervene if you go ahead,’ but in the end we actually have to make our case in court. We cannot prevent a merger from happening without having to go to court and make our case. So if we, for instance, clear a merger but subsequently it might be in breach of some other piece of legislation, then so be it.

CHAIR —Okay, I understand. The FSU also, in relation to that section 50, suggested a period for public consultation as part of the process.

Mr Grimwade —With informal merger reviews, in any public review of any significance, we engage in a very comprehensive degree of public consultation. I think what they were proposing was linked to their social audit proposal. I do not think they were being critical of the informal merger review process that happens. We will get into this, no doubt. But in the Westpac-St George merger and the Commonwealth Bank-Bankwest merger, we conducted some very extensive inquiries of a large array of interested people and companies, including getting very sensitive internal documents. For instance, in Westpac-St George, we obtained three years of their pricing committee documents of the merging parties to get a real sense of who they saw as their closest competitors and who they priced against.

CHAIR —In relation to the other issue that they raise, the noncompliance issue, you dealt with the issue about ACCC monitoring the conditions that Treasury put on, and you were talking about doing your own monitoring and compliance with the ACCC’s conditions.

Mr Grimwade —If the commission has a competition concern with a particular merger, or if the commission is of the view that it is going to breach section 50; it is substantially anticompetitive, there are really three options for the merging parties. One is to just go ahead with it and then challenge us in court. The other is that we tell them, ‘If you go ahead, we’re going to challenge you in court,’ and they walk away. The other is that they will come up with a series of undertakings whereby they seek to mitigate the anticompetitive concerns.

For instance, they might propose to divest some offending, overlapping businesses or assets. We have a process whereby we can accept those section 87B undertakings. In effect, they are conditions of us not objecting to a merger. It is somewhat irrelevant in respect of recent bank mergers because we cleared unconditionally the Westpac-St George merger and the Commonwealth Bank-Bankwest merger, but I was making the point that the commission does have a process whereby it can impose its own conditions that are directly relevant to the competition test.

CHAIR —Yes, I understand that. Given that we are looking at improving competition as well in this sector, how do you monitor that compliance? How would you monitor compliance with any such undertaking?

Mr Grimwade —We have instituted for some time in the mergers group a particular unit called the undertaking compliance unit. They are responsible for monitoring the obligations—and enforcing any breach of those obligations—of any section 87B undertaking given to us in a mergers context. So we have a system. There are a good number of staff in that unit, and we accept maybe half a dozen to a dozen undertakings a year. We try to have them structurally based rather than behaviourally based so we do not have to monitor them indefinitely; rather, there are certain actions that they have to undertake and we make sure that they have done what they are supposed to have done.

CHAIR —Where it is a divestiture of assets, I guess it is fairly clear-cut.

Mr Grimwade —Sometimes not that clear-cut.

CHAIR —I am trying to think of an example where it is a bit more difficult to assess that they have undertaken something. A divestiture is clear-cut but it might be, for example, that they will not do something else. If that happens, how do you then enforce? What actions can you take, given that the merger has already happened?

Mr Grimwade —I think it is section 87B(4) that prescribes how we can enforce a remedy. There is quite a wide variety of remedies that we can seek, and a court can basically give any order that it thinks is appropriate. In some cases—this is, again, something that happens internationally with other regulators—we would enshrine, usually in an undertaking, some default clause; so, if they fail to do something, then something else happens.

We could get a court order to enforce them to do what they promised to do and did not do. If there is a very substantive breach to an undertaking, in the occasional undertaking you could conceivably seek an order to unwind the original merger, but we have not really got to that point. There have been a few undertakings where we have had to go to court to enforce compliance but, by and large, the process is of negotiating and reaching an agreement, and the threat of enforcement and our monitoring capabilities tend to make those who have made promises to us to stick to those promises.

CHAIR —You made the point about not doing something for the financial services sector that you would not do across the board. Do you see any reason why the banking sector in particular deserves any separate treatment?

Mr Grimwade —That is more of a policy question. Parliament, I think, has already made that decision, because there is a separate act that prescribes a particular national interest test. But the point I was seeking to make was that section 50 is a section of general application and it should not be changed in any way to be different for one particular sector.

CHAIR —A lot of sectors are important to consumers and to business, and a lot depends on the way their business is conducted. Competition is very important and a range of services are very important so that there is choice, particularly where one group might refuse a loan or not be able to structure an appropriate loan. Given that we do have this policy of not dropping below the four pillars of the banking industry, is there any way that the ACCC views it in a special light?

Mr Grimwade —I think I understand the question. This is similar to what Senator Bushby was going to ask us. Are you asking us: do we have regard to competitive dynamics at a particular point in time or over the foreseeable future in making a decision?


Mr Grimwade —Yes, absolutely; we do. Decisions we make now will have regard to what we foresee as being competitive dynamics and structure over the foreseeable future: the next one to two years. It is fair to say that any decision we make now will be made in a different context to a decision that we might have made in the middle of last year.

Senator PRATT —I note that in the Fels era there was an explicit policy in relation to regional banking and maintaining that regional balance, and there is talk that that policy direction is changing. I do not want you to break any rules as to what you can and cannot say about policy, but clearly there was a competitive dynamic change. At which point do you get an explicit direction in how you implement and review these things, where you say, ‘That’s how we used to deal with it. This is how we deal with it now,’ in response to those market dynamics?

Mr Grimwade —Firstly, there is no general policy and there is certainly no direction given to us in terms of how we ought to treat mergers: there is this one section of the act and it has been the same for many years. But the market structure will differ as the market changes and as competitors and competitive constraints change. I do not want to make comparisons between what was decided 12 years ago and what was decided a couple of months ago. As a general point, in recent times there was real potential—and this was happening—for regional banks to expand beyond a particular state. We have seen that in the last couple of years with Bankwest expanding, Bank of Queensland expanding, and Bendigo-Adelaide merging.

Things have changed now, and we can get to that later, but a decision last year in that context might be seen through a different prism than a decision, say, in 1997, where it might have been considered that there was a need to have a regional bank in each state.

Senator PRATT —It is quite a different prism, as we heard from the FSU. They gave evidence in terms of, ‘Yes, we had an era where we had regional banks growing but now that they have reached a certain size, they are targets for takeovers so the bigger banks can leverage off them to increase their market share.’ That seems to be the new dynamic. What you are saying is that the prism through which you see that is the act, but then also staying on top of a sense of whatever those market dynamics are?

Mr Grimwade —That is right, and there is an additional factor, which is section 50. We apply section 50 on a case-by-case basis at the time, but there is a tipping point. There will be a tipping point, because the test is whether a merger has the effect of substantially lessening competition. Depending upon the environment and the constraints, and the threat of constraints, it is not conceivable that mergers can continue to occur, because there will be a point where a merger is going to substantially lessen competition, having regard to the environment that the merger is operating in at that time.

Senator EGGLESTON —Senator Bushby was going to ask you, I think, about the global economic crisis and how that would impact on your assessment of competition at the moment. In a way, you have answered that, but do you want to add anything to what you have just said?

Mr Grimwade —Yes. I would make the additional point that the global financial crisis has seen a vacation from Australia of some foreign lenders and a diminution in competition from, say, non-bank lenders and, importantly, a potential diminution in the threat of international competition. The structure of the market is a bit different now and we would have regard to the lessening of those constraints if and when another merger comes across our desks.

Senator EGGLESTON —I am interested in this idea of international competition specifically in relation to the growth of e-banking and electronic services. What is your view about the growth of electronic services in terms of electronic banking and preserving competition and access to international banks? As we said last night, you can apply for a personal loan at 2 am on a Thursday morning on the internet. You do not have to walk into a bank. You simply put your details on the internet and in due course it is approved or not.

Mr Grimwade —An important point to make from our perspective is that banks operate in a variety of different markets and in each of those markets there might be different competitors and differing competitive constraints. For instance, we have identified that in, say, transaction banking, for agricultural finance and equipment finance doing your banking in a branch is quite important, but there are other markets where having a branch available is not that important. So some markets, where you can conduct all of your banking electronically, might not be subject to the same competitive issues as some of the other markets we look at.

It is quite difficult to make a statement that banking is less competitive or more competitive, because each market is different really, and so in our examination of any merger we will dig down into each market and assess which markets are going to be affected by the competition. We could really only answer that question insofar as a particular merger is concerned. I am not an expert on e-banking as such, though.

Senator EGGLESTON —One of the other comments that was made this morning by Carol Gordon was that the conditions offered by banks for personal banking, transaction banking, are essentially the same and that there is really no competition. What are your criteria for competition? Would you agree that there is really no competition between the four major banks in terms of individual banking because the terms and conditions et cetera are essentially the same; it is one bland vanilla Australian banking system?

Mr Grimwade —I do not think it is correct to say that all the services and products that are provided are the same. It would be wrong to suggest that there is no competition between the four banks in the different markets. In a large number of instances, it is fair to say that when a new product is being launched other banks seek to match it, and there is a level of competing to that level of homogeneity in some instances, but we have found—and I am only really remarking on inquiries we have made in respect of two recent mergers—that the big banks have sought to distinguish themselves with particular products or services.

We have found that ANZ, for instance, has been seeking to try and distinguish itself from the customer service segment more so than the others. I think after the Commonwealth Bank-Bankwest merger, Bankwest is still running its Rate Tracker product, which is quite a distinctive product, and I am sure there are many other examples of distinctive services and products being offered by the banks. It is probably a question better put to the banks themselves, or Treasury.

Senator EGGLESTON —That is true. As you know, there is a time limit of three years on the existence of the independent entity of Bankwest. So, while they may have this product you have referred to, after three years in all probability they will not. In personal banking, the smaller banks, the provincial banks and the building societies offered a wider variety of innovative products than the big four do. The loss of various building societies has lessened the range of products available to the public, as a matter of fact, in personal banking.

Mr Grimwade —I think that is correct. If you look at Bankwest, we found that up until the middle of last year it was an extremely aggressive and innovative competitor. It had a quite different business model, it was very expansionary, it was a price leader, and it was obvious to us that the big banks saw it as a competitive threat. Unfortunately for competition, Bankwest suffered as a consequence of the impact of the GFC on its UK owner and we found quite convincingly, in our review of Commonwealth Bank-Bankwest, that without the merger Bankwest was not going to be the expansionary, innovative price leader that it had been. In fact, it was quite the opposite. It was, if anything, going to contract.

Senator EGGLESTON —I understand the rationale for it. Last night a comparison was made between Australia and Canada, and the Canadian and Australian banking systems—alone in the world almost—are not collapsing as they are in other countries. What comparisons do you make between Australia and Canada? Is there a body similar to yours in Canada overseeing competition between the banks?

Mr Grimwade —To be honest with you, I do not know anything about the Canadian banking system, but I do know that the Canadian Competition Bureau, which is our counterpart agency, has an act pretty similar to ours, and certainly its merger law is similar to ours—one of general application. I think it is based on a substantial lessening of competition test and is one of general application, but whether or not there are some specific banking laws that impact on competition or address competition in banking, I cannot answer that. I apologise for that.

Senator EGGLESTON —CHOICE said in their submission to us that they would like to see an investigation into compliance with merger conditions, particularly with reference to Westpac and St George and the Commonwealth and Bankwest mergers. Do you feel that is necessary? Are you happy with the compliance?

Mr Grimwade —That was the point I made initially. Those conditions are not the responsibility, nor do we think they should be the responsibility, of the commission because they are imposed by the Treasurer under a different test, not the test that we address and have expertise in. No, that is not something that we are responsible for.

Senator EGGLESTON —Fair enough. You did in fact cover that ground, I agree. Thank you very much.

CHAIR —Could I just read to you part of the FSU’s submission to get your comment on it. This relates to the Commonwealth-Bankwest acquisition and the global financial crisis:

The FSU strongly believes that mergers between any of the four major banks and other medium size banks has flow on effects, namely increased pressure for the other big banks to also acquire ‘second tier’ banks. To a certain extent this was demonstrated by the Commonwealth Bank’s acquisition of Bank West late last year. This merger was characterised as a “distressed sale” or “failing firm” scenario due to the global financial crisis; however we note and endorse the comments of former ACCC chairman Allan Fels who said that the larger banks should not be able to acquire their smaller competitors despite the global financial crisis and that he would be “concerned for competition” if the Commonwealth Bank was allowed to takeover Bank West given that the Government’s guarantee on deposits had resolved concerns about smaller bank stability.

Mr Grimwade —If I can verbal Professor Fels a bit, I suspect the point that he was making is one that we would also consistently approach. That is, if a bank is failing or is in distress, you have to have regard to what the situation is going to be if the merger does not go ahead. If that bank is acquired by, say, another regional bank or an international competitor, you might end up with a pro-competitive outcome compared to a situation where it might be less than competitive—for instance, the Commonwealth Bank acquiring Bankwest.

Part of our inquiries in the Commonwealth-Bankwest matter were to see what would happen if Commonwealth did not buy Bankwest. What would be the situation? We spoke to every firm, every bank, that had expressed any interest in acquiring Bankwest—and that included international banks, all the Australian banks, others—and it was quite apparent from our inquiries that if Commonwealth Bank did not buy Bankwest no-one else was likely to buy it. Essentially, we concluded that without the acquisition HBOS UK and Lloyds would continue to run Bankwest, but not at all in the way Bankwest had previously been run. It would no longer be the price leader. It would no longer be a vigorous or effective competitor. That was the conclusion we reached.

When we look at any merger, we have to compare two scenarios: the scenario of the merger in the future and the scenario that is likely to exist without that merger. Sometimes, if it is a distressed or failing firm, we will have regard to, ‘Where are those assets going to go? Are they going to go to some other competitor that might pick them up and generate a more pro-competitive outcome compared with the merger?’ That is one of our inquiries.

CHAIR —If your finding was that Bankwest would have been allowed to continue but at a much lower level, not such an aggressive firm, that might have been so for the period of recession around the world but it might, after the recovery, have then taken off on a trajectory again where it was more aggressive.

Mr Grimwade —Certainly that would have been our hope but the evidence that we gathered was that that was just not a likely future scenario. Bankwest was not going to just remain there with its branches. Not only were expansion plans going to be eliminated but the bank was very likely to contract. It had a $16 billion wholesale funding that it needed to return to its parent, which was then and is now in even more dire straits. Our finding was that it was not going to be a sustainable proposition that would turn around and become the effective and vigorous competitor that you suggested it might. We spoke to HBOS UK, and Lloyds as well, in terms of what their plans were, and the expansionary and price leadership strategies of Bankwest were very much determined by its parent company in the UK.

CHAIR —Thank you. Both CHOICE and the FSU recommended that the ACCC, together with the Reserve Bank, publish an annual report to parliament on retail banking competition. I am not asking you to comment on whether that is desirable or not, but is there any impediment to doing that kind of thing from your point of view, or any difficulty with that?

Mr Grimwade —I might ask Mr Wing to answer that question.

Mr Wing —We can clearly monitor anything that the minister formally directs us to. It would have to be consistent with our roles and functions under the act, and competition is clearly one of our functions under the act. Some of the other suggestions put forward in those submissions about things that we could monitor—for example, offshoring—would not really fall within our roles, functions or expertise, but it would be very much up to the minister, and obviously that is a policy question.

CHAIR —There would be no difficulty for you in producing such a report that talks about things like the number of providers and concentration ratios and so on? There would not be any difficulty in the ACCC doing that kind of thing?

Mr Wing —To the effect that they were relevant to competition, yes. I should probably point out that we deal with the competition aspects of the act with respect to the financial services sector. There is actually a carve-out and there is a specialist regulator, ASIC, which deals with general consumer protection and unconscionable conduct provisions in the financial services sector, but to the extent that the things that we are asked to monitor are part of the competition aspects, yes, we could do that if given a direction and, as I said, that would be a matter for the minister.

CHAIR —Is that kind of information available anywhere now? Is that generally published anywhere?

Mr Wing —I would not like to go through them point by point, but the Reserve Bank publishes bulletins and findings from time to time which survey statistics on the banking sector, so some of those things may be in the Reserve Bank’s publications at the moment.

CHAIR —Any other questions? Senator Furner.

Senator FURNER —The FSU, in its submission, indicates that the merger between Westpac and St George will result in an estimated 5,000 job losses; Commonwealth and State Bank of Victoria 8,000; Westpac-Bank of Melbourne 1,400; and Commonwealth-Colonial 4,500. Does the ACCC, when it is assessing a merger, consider job losses at all?

Mr Grimwade —No. The merger test under section 50 is directed at the effects on competition, and the foundation for this law and similar laws around the world is essentially that, in terms of assessing the competition of a merger, the focus is on the protection of the competitive process and how that can ensure the welfare of consumers. The commission does not have to have regard to job losses. In a sense, most mergers will have some adverse social impact, because most mergers are proposed because efficiencies can be gained through rationalisation and so forth.

Senator FURNER —Surely if there is a diminishment of jobs and the likelihood of offshoring of some of those jobs, that has an impact on consumers in terms of service and communication?

Mr Grimwade —Yes. There is one issue: that if a merger is anticompetitive and we would otherwise oppose it, there is a process by which we can allow a merger to occur if it is in the net public interest, but it is not a factor for us to have regard to in looking at whether or not a merger is going to substantially lessen competition. In fact, there are a range of factors set out in section 50 which are directed towards the competition effects, and they go to things like market concentration, barriers to entry, import competition, substitutable products and services, removal of a vigorous, effective competitor—those sorts of things. But there is no social impact criteria that one has regard to. Our view is that if there is a need for some social policy mechanism, that should be separate to section 50.

Senator FURNER —Thanks.

CHAIR —Thank you to the ACCC for coming in this morning. Thank you to Hansard and Broadcasting. The committee is adjourned.

Committee adjourned at 11.20 am