Brussels, 11/06/2002 (Agence Europe) - The Commission has imposed a total fine of EU 124.26 million on eight Austrian banks for their participation in an agreement known as the "Lombard Club" which used wide-ranging price fixing techniques. Commissioner Monti described this agreement as, "one of the most shocking that the Commission has ever come across" because of the nature of its institutionalised character and the length and breath of the country it covered. It began well before Austria joined the EEE in 1994 and covered the whole of the Austrian country in fixing deposit, lending and other rates. The banks involved are Erste Bank (a fine of EUR 37.69 million), Bank Austria (a fine of EUR 30.38 million), Raiffaisen Zentralbank Österreich (a fine of EUR 30.38 million), Bank für Arbeit und Wirtschaft Aktieengesellschaft (a fine of EUR 7.59 million), Österreischische Postparkasse Aktiegesellschaft (a fine of EUR 7.59 million), Österreischische Volksbanken (a fine of EUR 7.59 million), NO Landesbank-Hypotheken bank (a fine of EUR 1.52 million), and Raiffensisenlandesbank Niederösterreich- Wien reg Gen (a fine of EUR 1.52 million). The investigation began in 1998. Alerted by articles appearing in the Austrian press, European investigators accompanied by civil servants from the Austrian Ministry of Economic Affairs carried out surprise inspections at a number of Austrian banks. During the investigation they found a number of compromising documents demonstrating the existence of a network of cartel committees covering the whole of Austria, as well as banking products and services in which highly placed members of the banking establishment participated. The members of the cartel fixed interest rates for loans and savings for homes and businesses, as well as fees consumers had to pay for certain services. The cartel also extended to money transfers and export financing. The object of the Lombard Cartel was to exchange experience between banks in relation to interest rates as a repeatedly useful means of avoiding uncontrolled price competition. Constant exchanges of information took place between the different cartel committees, as well as between themselves and the Lombard club. Between January 1994 and the end of June 1998, in Vienna alone at least 300 meeting took place. What often triggered a committee meeting to be convened was a change in the key lending rates by the Austrian Central Bank, whereupon the banks promptly met for the "joint reflection of measures to be taken".
To calculate fines in cartel behaviour, the Commission took into account the gravity of the infringement, its duration and the existence of any aggravating or mitigating circumstances. It thus reduced the amount that it would normally have imposed, with banks that collaborated closely with it in the investigation, as the communication over clemency explained in 1996. As banks did not contest the facts set out in the statement of objections, a reduction of 10% was granted. The companies have three months to pay the fines. During a press conference, Mario Monti sad that the banks must not think that they are not subject to European competition rules as other sectors in the economy. The total fine imposed on the "Lombard Club" is the sixth largest ever imposed and which can not exceed the 10% of annual turnover and reaches 1.8% of turnover for one of the banks and is less than that for the other banks.
Mr Monti underlined the fact that candidate countries still have a lot to achieve in order to adopt the acquis in competition policy. "We are at a key juncture in the process", he explained, emphasising that only four countries (the Baltic countries and Slovenia) have closed their competition chapters and that significant progress had to be made between now and the next Summit in October. He pointed out that the candidates had mostly advanced on aspects linked to mergers rather than in the field of State Aid where taxation assistance systems still exist which are incompatible with European competition rules, as well as important aid in sensitive sectors such as steel. Mr Monti will be participating on Sunday and Monday at the eighth conference on competition in Vilnius.