Don't bank on bank competition: The case for effective laws against anti-competitive mergers and creeping acquisitions

With the fast growing dominance of the four major Australian banks, there are serious concerns regarding the rapidly diminishing level of competition in the Australian banking sector. From a competition law perspective, this raises important issues regarding the potential ineffectiveness of Australia's anti-merger laws in dealing with the relentless merger and acquisition strategies of the four major banks. With the Australian Competition and Consumer Commission approving around 97% of the mergers and acquisitions it considers, there is a real and present danger that the current s 50( 1) of the Trade Practices Act 1974 (Cth) is allowing far too many mergers and acquisition to proceed, especially in the banking sector. This is detrimental to competition and consumers because it allows the remaining large and powerful firms in those markets to exercise pricing power to push up prices at will. Another challenge is dealing effectively with creeping acquisitions, which are particularly dangerous because they involve the piecemeal destruction of competition through stealth. This article will consider the operation of Australia's current anti-merger laws within the context of the Australian banking sector and discuss possible legislative and other reforms.