WRITTEN QUESTION P-2164/99 by Christopher Huhne (ELDR) to the Commission. Inquiry into rising foreign exchange costs.
Date: 1999-11-19
Institutions: European Parliament, Provisional data
Subjects: Eurocurrency, United Kingdom, economic consequence, exchange transaction, foreign currency, foreign exchange market, non-participating country (euro area), unlawful agreement

8.8.2000

EN

Official Journal of the European Communities

C 225 E/61

(2000/C 225 E/060)

WRITTEN QUESTION E-2160/99

by Cristiana Muscardini (NI) to the Commission

(24 November 1999)

Subject: Responsibility for freedom of movement and public safety

The pressing problem of security, with reference to illegal immigration, was discussed at the Tampere
European Council of 15 and 16 October 1999. It has now finally been acknowledged that immigration is
an issue to be dealt with at European level, rather than by each Member State working on its own. There
has nonetheless been a failure to understand the difference between the freedom of movement established
following the abolition of internal borders, which comes within the Union(cid:146)s sphere of responsibility, and
the management of public safety issues, which is the responsibility of the Member States, whose laws have
not been harmonised and are in some cases totally dissimilar. For example, the sale and use of self-defence
devices, such as sprays used to ward off attacks by bag-snatchers or rapists, is permitted in some Member
States, while in others even their very use is prohibited.

Without going into the merits of an internal market within which some products are legal in certain
in others, does the Commission not consider that it would be useful and
Members States and illegal
appropriate, pending the implementation of the (cid:145)third pillar(cid:146), to call on the Member States, as part of
action to combat crime and protect the public, to ensure that basic self-defence devices such as sprays and
low-voltage electrical fences are legalised in all Member States, with, if necessary, each being free to lay
down its own rules governing the sale and installation or use of such devices?

Answer given by Mr Vitorino on behalf of the Commission

(27 January 2000)

According to the Treaty on European Union, and as confirmed by the special meeting of the European
Council held on 15 and 16 October 1999 in Tampere, one of the objectives of the Union shall be to
provide citizens with a high level of safety within an area of freedom, security and justice.

This shall be done by, inter alia, developing common action among Member States in the fields of police
cooperation.

Common action in the field of police cooperation shall include cooperation and joint initiatives in, among
others, the use of equipment.

Any action developed in this context shall not, nevertheless, affect the exercise of the responsibilities
incumbent upon Member States with regard to the maintenance of law and order and the safeguarding of
internal security.

The measures suggested by the Honourable Member seem to fall under the said responsibilities of Member
States.

Moreover, the Commission reaffirms its willingness to promote the full and immediate implementation of
the Treaty of Amsterdam on the basis of the Vienna action plan and of the political guidelines and
concrete objectives agreed by the European Council in Tampere.

(2000/C 225 E/061)

WRITTEN QUESTION P-2164/99

by Christopher Huhne (ELDR) to the Commission

(19 November 1999)

Subject: Inquiry into rising foreign exchange costs

Will the Commission confirm that there has been a very sharp rise in the foreign exchange dealing costs
between the euro and the pound sterling over the past year, and will it consider whether there has been
any illicit collusion between participants in this market, or whether there is an abuse of a dominant
position?

C 225 E/62

Official Journal of the European Communities

EN

8.8.2000

Answer given by Mr Monti on behalf of the Commission

(7 December 1999)

The Commission is aware of cases where the foreign exchange dealing costs between the euro and the
pound sterling have risen following the introduction of the euro. The Commission understands that this
has arisen for the following reasons.

The bid/offer spread on foreign exchange markets is measured in (cid:145)pips(cid:146). Thus, if the bid price for sterling/
euro is 0,6397 and the offer price is 0,6399, there is a spread of two pips. The Commission understands
that prior to the introduction of the euro, the bid/offer spread on the retail market for sterling/deutsch-
marks was in the region of five pips for GBP 5 million. Following the introduction of the euro, the bid/
offer spread on the retail market for sterling/euro is in the region of three pips for € 10 million. Given the
difference in value between the euro and the deutschmark, although the spread has gone down in absolute
terms, the cost in percentage terms has increased significantly. The Commission understands that there is
also currently a bid/offer spread of around three pips for sterling/euro on the interbank market. This
apparently makes it difficult for banks to charge less than three pips on the retail market.

These facts could suggest an absence of competitive pressure on providers of foreign exchange services to
reduce their spreads, either at the retail level or at the interbank level or both. However, they are not
evidence in themselves that infringements of Community competition law either have been or are taking
place.

So far as the application of Article 82 (ex Article 86) of the EC Treaty is concerned, there are many
hundreds of banks which deal
in sterling/euro and provide foreign exchange services to corporate
customers. It seems unlikely therefore that any individual bank is in a dominant position or that there
are a number of banks which could be considered to be in a joint dominant position. As regards the
application of Article 81 (ex Article 85) of the EC Treaty, the Commission has no evidence that collusion
has taken place. Indeed,
in general terms, successful collusion to maintain or increase spreads would
probably require two elements, both of which appear to be missing on this market. The first is that there
would need to be a relatively small number of participants in the collusion. A cartel involving hundreds of
participants would seem most unlikely. Secondly, successful collusion would require some degree of
transparency of prices in order to allow for enforcement. However, on the retail market, the spread is in
principle only known to the buyer and seller. For these reasons, it might be considered that a spreads
cartel on the foreign exchange retail market would be unlikely to succeed.

Finally, although the Commission has not received any formal complaint regarding the subject matter of
the Honourable Member(cid:146)s concern, it will continue to monitor the situation.

(2000/C 225 E/062)

WRITTEN QUESTION E-2168/99

by Gerhard Schmid (PSE) to the Commission

(29 November 1999)

Subject: Teleworking centres in Bavaria

in all administrative
The Bavarian land government wishes to establish so-called (cid:145)teleworking centres(cid:146)
districts that are Objective 5b areas, as part of the (cid:145)top-eleven(cid:146) programme. A total of 40 such centres are
to be established in Bavaria. The amount of DEM 60 million is being contributed from public funds. The
greater part of
that amount consists of European aid allocations. The Objective 5 programme is
contributing some DEM 17,8 million, and about DEM 7,5 million are coming from the European Social
Fund. The Bavarian land contribution runs to about DEM 15 million.

A brochure has also been prepared. It does not contain a single mention of the fact that the greater part of
the funding has been allocated from the EU budget. Nor is any indication to be seen on the ground, on
any of the projects known to me, that European funding has been provided.