Are bank cross-subsidies anti-competitive?

What is the difference between the major banks and the way they fund dealer group services and the manner in which Coles and Woolworths subsidise petrol station discounts?

The answer is very little, according to Premium Wealth Management chief executive Paul Harding-Davis, who said today he was surprised that no one had thought to raise the issue with the Australian Competition and Consumer Commission (ACCC).

Referencing the manner in which the competition watchdog had examined how the two major supermarket chains, Coles and Woolworths, had used grocery sales to deliver discounts at the petrol bowser, Harding-Davis said he believed a number of the major banks were using similar strategies to deliver lower-priced dealer group services.

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"Anyone who looks at the two regimes might conclude that parallels exist between supermarkets using grocery sales to subsidise petrol operations and financial services companies who use revenues from product sales to subsidise dealer-group services," he said.

Harding-Davis said that such practices made it very difficult for non-aligned dealer groups to compete on cost.

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