ANZ accused of price signalling
(25th January 2011 – Australia) Australia and New Zealand Banking Group’s (ANZ) chief executive Mike Smith has been accused of price signalling by the Australian Competition and Consumer Commission (ACCC).
The competition watchdog’s chairman, Graeme Samuel told the Senate Economics Committee’s inquiry into bank competition that if a bank chief said that they would prefer not to move interest rates, but did not want to be left behind, then that would be price signalling.
Mr Samuel was asked by Senator Annette Hurley if Mr Smith’s comments that he did not "want to be stuck out on his own" was price signalling.
Mr Samuels told the committee that it would, however said that the ACCC could not deal with such price signalling under its current powers.
Senator Julian McGauran questioned the ACCC’s chief executive, Brian Cassidy, asking if price signalling equated to price collusion.
Mr Cassidy said it wasn’t, however "in competition terms, it has exactly the same outcome."
Mr Samuel’s said that a ban on price signalling would not prevent a general economic discussion between market players over interest rates.
Mr Samuel said the test for price competition was not so much about market information as it was about signalling to bank competitors and softening up the market in a way that would 'remove the uncertainty associated with the true competitive tension.'
Consumers of bank products would be more concerned with interest rates over the long term than next week's interest rate move by the banks, he said.
Therefore, price signalling conferred much more benefit on banks than consumers, he said.
Mr Samuel was asked by Senator Annette Hurley if Mr Smith’s comments that he did not "want to be stuck out on his own" was price signalling.
Mr Samuels told the committee that it would, however said that the ACCC could not deal with such price signalling under its current powers.
Senator Julian McGauran questioned the ACCC’s chief executive, Brian Cassidy, asking if price signalling equated to price collusion.
Mr Cassidy said it wasn’t, however "in competition terms, it has exactly the same outcome."
Mr Samuel’s said that a ban on price signalling would not prevent a general economic discussion between market players over interest rates.
Mr Samuel said the test for price competition was not so much about market information as it was about signalling to bank competitors and softening up the market in a way that would 'remove the uncertainty associated with the true competitive tension.'
Consumers of bank products would be more concerned with interest rates over the long term than next week's interest rate move by the banks, he said.
Therefore, price signalling conferred much more benefit on banks than consumers, he said.
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