Regulator accuses ANZ of price signalling

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Australia's competition regulator has accused ANZ Banking Group chief executive Mike Smith of price signalling interest rate movements.

Australian Competition and Consumer Commission (ACCC) chairman Graeme Samuel also said the regulator would still consider mergers in the banking sector but would take a cautious and conservative approach.

Samuel told the Senate Economics Committee's inquiry into bank competition that if a bank chief said they would prefer to not move interest rates, but didn't want to be left behind their competitors, then that would be price signalling.

Senator Annette Hurly asked Samuel if Smith's comments that he did not "want to be stuck out on his own" would equate to price signalling.

Samuels affirmed that it would but told the committee that the ACCC couldn't deal with such price signalling under its current powers.

Under questioning from Senator Julian McGauran as to whether price signalling was the same as price collusion, ACCC chief executive Brian Cassidy said it wasn't.

"But in competition terms, it has exactly the same outcome," he told the inquiry, which sat in Melbourne yesterday.

A ban on price signalling would not prevent a general economic discussion between market players over interest rates, Samuel said. He 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.

Samuel said the ACCC would still consider mergers in the banking sector, despite an erroneous interpretation by commentators on his comments that the regulator would take a cautious and conservative approach had been taken to mean there would be no more allowed.

When questioned over whether the ACCC would still approve the merger between Westpac and St George if it was proposed today, Samuel said he was not sure the regulator's decision would change.

- AAP