Brussels, 17/10/2007 (Agence Europe) - On Wednesday 17 October, the European Commission addressed a decision to the French Groupement des Cartes Bancaires (CB), concluding that it has infringed the rules of the EC Treaty banning restrictive competition practices (article 81). The Groupement has adopted price measures which vary depending on the members, favouring large banks, and hindering the issuing of cards at competitive prices by certain members, such as on-line banks and supermarkets. The decision will not be accompanied by a fine, but will require the Groupement immediately to council the measures in question and to abstain, in future, from adopting any measures with a similar objective or effect. Neelie Kroes, the Competition Commissioner, stated: “the Commission cannot tolerate behaviour that goes against the objectives of SEPA (Single Euro Payment Area: Ed)”.
The Groupement des Cartes Bancaires manages the “CB” card payment system, which represents more than 70% of all card payments made in France. All Visa and MasterCard cards issued in France function there as “CB” cards. The Groupement has some 150 members. It is managed by the largest French banking groups: Crédit Agricole, le Crédit Lyonnais, le Crédit Mutuel, le Crédit Industriel et Commercial, la Société Générale, le Crédit du Nord, BNP-Paribas, Natexis - Banques Populaires, les Caisses d'Epargne, La Poste and le Crédit Commercial de France.
The measures at issue consist of charges adopted by the Groupement, which have to be paid by certain members under certain conditions on the basis of the number of cards issued. Although, in principle, these tariffs are applicable to all members of the Groupement, they have been applied by its management in such a way as to hinder the issuing of cards by other banks at a price lower than that of the large banks. A key measure is the “MERFA” (“Mécanisme Régulateur de la Fonction Acquéreur”), a formula that determines whether a fee of up to 11 euros on each card issued should be paid by member banks that are not “sufficiently” active in terms of acquisition of merchants or installation of automatic teller machines (ATMs). The other measures are: a membership fee of 12 euros per card, additional membership fee and a “sleeping member” fee of 12 euros per card issued above the maximum number of cards defined by the Groupement.
The Groupement claims that these measures are necessary to avoid free-riding on the investments made by the main incumbent banks, and because these measures provide incentives for new competitors to the main banks to acquire merchants and to install ATMs. The Commission's investigations showed, however, that these measures do not have the effect claimed by the Groupement; quite the contrary. On the basis of the very make-up of the measures, information on prices, the number of cards issued and documents obtained during inspections in May 2003 at the premises of the Groupement and of the main banks which took part in the adoption of these measures, the Commission reached the conclusion that these charges were brought in in order to restrict competition on the payment card issuing market in France and that this is precisely the effect that they have had.
The adoption of the restrictive measures was made possible by the distinction drawn, in the constitutional contract of the Groupement, between the large banks which make up its Board of Directors and the other members (which include the banking arms of large retailers (Carrefour, Auchan) and on-line banks). Only Board members can adopt price measures, without first needing to consult or inform the other members or obtain their votes in support of the measures. The Commission has analysed the measures concerned as the decision of an association of undertakings taken solely by the Groupement. The Commission decided not to impose any fines on the Groupement, since the measures were notified to it in December 2002 with a view to obtaining a decision on their compatibility with the competition rules (this possibility no longer exists, since the regulation 1/2003 entered into force). It is, however, worth noting that although the application of the measures was suspended in 2004, pending a decision of the Commission, the measures continue to have an affect on the market because, until they are repealed, the competitors of the major banks issue fewer cards and at less competitive rates than they would if the measures did not exist.
Xavier Durieu, Secretary General of Eurocommerce, the association representing retail, wholesale and international trade in Europe, said that “the Commission has kept its promise to resolve the problems of the credit card market before the introduction of the SEPA: consumers, retailers and, therefore, the economy of the Union as a whole, stand to gain from this”. (C.D.)