Communication from the Commission - Sector Inquiry under Article 17 of Regulation (EC) No 1/2003 on retail banking (Final Report)
Date: 2007-01-31
Institutions: European Commission
Subjects: bank, competition law, competition policy, report, single market

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 31.1.2007 
COM(2007) 33 final 

COMMUNICATION FROM THE COMMISSION 

Sector Inquiry under Article 17 of Regulation (EC) No 1/2003 on retail banking (Final 
Report) 

{SEC(2007) 106} 

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COMMUNICATION FROM THE COMMISSION 

Sector Inquiry under Article 17 of Regulation (EC) No 1/2003 on retail banking (Final 
Report) 

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On  13  June  2005  the  Commission  initiated  an  inquiry  into  retail  banking.  The 
instrument of sector inquiries has its legal basis in Article 17(1) of Regulation (EC) 
No  1/2003.  According  to  this  provision  the  Commission  may  decide  to  conduct  an 
inquiry into a particular sector of the economy or into particular types of agreements 
across various sectors, where the trend of trade between Member States, the rigidity 
of  prices  or  other  circumstances  suggest  that  competition  may  be  restricted  or 
distorted within the common  market. This document is the final report of the retail 
banking inquiry1. 

INTRODUCTION 

The  European  banking  sector  has  undergone  significant  growth  and  diversification 
over  the  last  two  decades.  Today  it  directly  provides  over  three  million  jobs  in  the 
EU.  Retail  banking  –  defined  as  services  to  consumers  and  small  and  medium 
enterprises (SMEs) – remains the most important sub-sector of banking, representing 
over 50% of total EU activity in terms of gross income. The Commission estimates 
that in 2004 retail banking activity in the European Union generated gross income of 
250-275 € billion, equivalent to approximately 2% of total EU GDP2.  

The  European  retail  banking  sector  provides  vital  services  including  saving, 
borrowing  and  payments  to  consumers  and  small  and  medium  enterprises  (SMEs). 
However,  a  number  of  indicators  such  as  market  fragmentation,  price  rigidity  and 
customer immobility suggest that competition in the EU retail banking market may 
not be working effectively. Based on Regulation (EC) No 1/20033, the Commission 
therefore  decided  to open  an inquiry into the  retail banking4 sector, in particular in 
relation to cross-border competition. 

The sector inquiry forms part of the wider political context of the Lisbon Agenda and 
will  help  to  deliver  the  objectives  set  out  in  the  White  Paper  Financial  services 
policy  2005-20105,  where  the  Commission  stressed  the  importance  of  the  close 
interaction of internal market policy and competition policy. Likewise the creation of 
a more competitive environment between service providers, especially those active in 
retail  markets,  was  identified  as  a  priority.  Delivering  these  goals  will  enable 
European  consumers  to  reap  the  full  benefits  of  the  internal  market.  The  sector 
inquiry  into  retail  banking  contributes  to  this  agenda  by  shedding  light  on  the 

Interim reports were published on 12 April 2006 (payment cards) and 17 July 2006 (current accounts 
and related services). 
Figures taken from Interim Report II of the sector inquiry into retail banking. 
See: http://eur-lex.europa.eu/LexUriServ/site/en/oj/2003/l_001/l_00120030104en00010025.pdf. 
See: 
http://ec.europa.eu/comm/competition/antitrust/others/sector_inquiries/financial_services/decision_retai
lbanking_en.pdf 
See: http://ec.europa.eu/internal_market/finances/policy/index_en.htm  

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operation of the market; highlighting possible market failures; and identifying where 
market failures can be tackled through competition law and, where appropriate, other 
measures. 

To  underpin  the  development  of  a  single  market  for  financial  services  and  harness 
the  full  potential  benefits  of  the  euro,  the  European  banking  industry  is  creating  a 
Single Euro Payment Area (SEPA). The SEPA project aims at creating an integrated 
market  for  payment  services  which  is  subject  to  effective  competition  and  where 
there  will  be  no  distinction  between  cross-border  and  national  payments  within  the 
euro area. The Commission and the European Central Bank strongly support and are 
working closely with industry on the development of SEPA. 

MAIN FINDINGS OF THE SECTOR INQUIRY INTO RETAIL BANKING 

The sector inquiry has identified a number of symptoms suggesting that competition 
may  not  function  properly  in  certain  areas  of  retail  banking  The  inquiry  has 
confirmed  that  markets  remain  fragmented  along  national  lines,  including  in  retail 
banking infrastructures such as payment systems and credit registers.  

Different  market  structures  can  explain  different  conduct  and  performance  of  the 
banking  sector  between  Member  States.  As  the  inquiry  shows,  this  is  reflected,  for 
instance, in a wide variety of profit margins, prices and selling patterns between the 
Member  States.  By  contrast,  the  inquiry  has  found  evidence  of  convergence  of 
banks’ prices and policies within individual Member States. High profitability could 
signal  a  supportive  business  cycle  and  favourable  macro-financial  conditions  or  a 
number  of  other  factors,  including  increased  efficiency  in  banks'  operations. 
However  in  some  Member  States,  the  conjunction  of  sustained  high  profitability, 
high market concentration and evidence of entry barriers raises concerns about banks' 
ability to exploit market power over consumers and small firms. 

The  sector  inquiries  identified  a  number  of  factors  which  might  suggest  that  the 
symptoms  discussed  above  reflect  a  problem  of  competition.  First,  the  banking 
industry is characterised by  a variety  of possible entry  barriers.  These  barriers  may 
consist of network and standardisation requirements for certain infrastructures, or be 
of  a  regulatory  or  behavioural  nature.  From  the  view  point  of  competition  policy 
behavioural  entry  barriers  are  of  particular  concern,  for  example  access  barriers  to 
payment  systems,  which  may  result  from  abuse  of  a  dominant  position  –  e.g.  by  a 
dominant  network  –  or  by  co-ordinated  behaviour  of  incumbents  to  exclude 
newcomers. 

Secondly, the nature of retail banking activity creates scope for formal co-operation 
among  market  players.  Certain  types  of  co-operation  (e.g.  creating  and  operating 
common  standards  and  platforms)  may  be  necessary  to  generate  efficiencies. 
However,  co-operation  extending  to  banks’  strategies,  pricing  or  selling  policies 
could lead to collusion and limit competition and/or exclude third parties.  

During the inquiry's market survey and following public consultation, banks had the 
opportunity to highlight, in confidence, any entry barriers and competition problems 
they faced. Very few banks chose to provide information though a handful pointed to 
significant behavioural barriers they faced as foreign entrants. 

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11. 

The  sector  inquiry  has  identified  competition  concerns  in  the  following  areas:  (1) 
payment  systems,  including  card  payment  systems;  (2)  credit  registers;  (3) 
cooperation  between  banks;  and  (4)  setting  of  prices  and  policies.  Therefore  action 
by competition authorities could be needed, in close cooperation with regulators and 
supervisors, to strengthen competition in several Member States.  

2.1. 

Payment systems 

2.1.1.  Payment card systems 

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The  European  payment  cards  industry  provides  the  means  for  a  significant  part  of 
sales in Europe. Total sales volumes with card transactions in the EU in 2005 were 
more than €1350 billion6. 

The  sector  inquiry  has  identified  several  significant  competition  issues  in  the 
European  payment  cards  market7  that  confirm  the  need  for  strong  competition  law 
enforcement  in  close  cooperation  with  national  competition  authorities.  The 
Commission  has  already  taken  action  in  several  cases,  including  MasterCard8  and 
Groupement des Cartes Bancaires9. 

2.1.1.1.  High variation in card fees across the EU  

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in  merchant,  cardholder  and 

The  substantial  discrepancy 
fees 
(multilateral  interchange  fees)  across  the  Member  States  highlights  market 
fragmentation.  In  2004,  inter-bank  fees  on  credit  cards  in  Visa  and  MasterCard 
networks in Portugal were more than twice the level of those in Slovakia. Meanwhile 
merchant  fees  for  the  same  type  of  cards  in  Portugal  and  the  Czech  Republic  were 
more  than  three  times  the  level  of  fees  in  Finland  and  Italy.  Although  the  Member 
States  tend  to  have  quite  different  historical  backgrounds,  differences  of  such 
magnitude could be explained by the presence of competition barriers.  

inter-bank 

The identified multilateral interchange fees raise competition concerns, particularly 
in some countries. Card payment networks argue that, given the typical set-up of card 
payment mechanisms10, the card issuers typically bear the main costs of the payment 
system, while most of the revenues are collected on the acquiring side as merchant 
fees.  Therefore,  the  card  payment  networks claim that there is  a need to redressing 
cost imbalances by an interchange fee mechanism, i.e. a fee paid by the acquirers to 
the issuers. However, the evidence shows that most domestic debit card networks set 
significantly  lower  (or  even  zero)  interchange  fees  than  international  networks  on 
debit card transactions, resulting in generally lower merchant fees. 

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This estimate refers solely to point of sale transactions. Automatic teller machine (ATM) transactions 
are not included. 
The current analysis did not extend to ATM transactions. 
Case COMP/34579. 
Case COMP/38606. 
A typical card payment mechanism is described in Interim Report I on payment cards  

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Analysis  of  the  inquiry’s  market  data  suggests  that  card  issuing  alone  (i.e.  without 
interchange  fee)  generates  positive  profits  in  twenty  Member  States11.  There  is  an 
ongoing  debate  on  how  far  multilateral 
interchange  fee  mechanisms  are 
indispensable in practice to enable the efficient operation of payment card networks; 
and,  if  such  multilateral  interchange  fees  were  indispensable,  on  the  necessary 
conditions for their admission. 

2.1.1.2.  Structural barriers in payment card networks 

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In several Member States, acquiring of Visa and/or MasterCard transactions is done 
by a monopoly player. Such acquirers act as joint ventures of incumbent banks that at 
the  same  time  issue  cards  on  that  market.  This  situation  may  enable  issuers  to 
exercise significant market power and thus lead to uncompetitive merchant fees.  

2.1.1.3.  Access and governance arrangements 

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Ireland, 

in  Belgium,  Denmark,  Finland,  France,  Hungary, 

In international networks (Visa and MasterCard), as well as in national card payment 
systems 
Italy, 
Luxembourg, Netherlands, Portugal and Spain, membership rules reserve the right of 
issuing  and  acquiring  to  credit  and/or  financial  institutions,  or  to  an  entity  under 
direct control of such institutions. While it could be argued that this pre-condition is 
justified  for  supervisory  or  financial  stability  reasons,  it  limits  participation  of 
merchants  and  processors  in  issuing  and  acquiring,  hence  undermining  the  intra-
network  competition  in  these  countries.  Similar  concerns  appear  with  respect  to 
access  to  infrastructures12.  In  Ireland,  the  Netherlands  and  Portugal  the  national 
system  rules  require  the  local  presence  of  a  foreign  entrant,  by  means  of 
establishment  of  a  local  branch  and/or  a  subsidiary.  This  requirement  increases  the 
costs of foreign entry, which may limit the intra-network competition.  

19. 

According  to  certain  governance  arrangements  within  the  French  and  Spanish 
national card payment systems as well as in Visa and MasterCard networks, associate 
members  are  obliged  to  report  business  sensitive  information  to  the  principal 
members without reciprocal data sharing. This undermines the competitive position 
of associate members and reduces the competition pressure of principal members 

2.1.1.4.  Network rules and membership fees 

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Acquirers apply blending13 to competing products both in domestic and international 
card  payment  systems.  Acquirers  in  France,  Belgium,  Denmark,  Hungary,  Ireland 
and  Portugal  report  full  (100%)  blending  of  Visa  and  MasterCard  merchant  fees, 
while in Spain, Sweden and Malta, blending is reported in more than 60% of cases. 
The results of the inquiry suggest that blending of prices may weaken inter-network 
price competition, which in turn leads to retailers paying higher fees.  

Portugal,  Latvia,  Estonia,  the  Czech  Republic  and  Italy  have  the  highest  estimated  levels  of  issuing 
profitability  (gross  profit-to-cost  margin of at  least  60%) of  credit  cards  business, without  accounting 
for interchange fee revenues. 
The  financial  institution  requirement  may,  however,  no  longer  apply  when  the  proposed  Payment 
Services Directive is implemented. 
‘Blending’  is  acquiring  banks’  practice  of  charging  businesses  a  global  price  for  accepting  cards  of 
different types and/or issued by different networks, without distinction between interchange fee levels. 

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Some  network  rules  co-branding14  may  also  impede  entry  or  at  least  make  it  more 
difficult.  The  prohibition  on  co-branding  with  networks  which  are  deemed 
competitors  and  with  non  banks  might  limit  competition  between  networks  and 
between banks and non-banks respectively. 

Similarly,  the  prohibition  for  merchants  to  charge  customers  a  usage  fee, 
surcharging15,  in  many  networks  may  hinder  the  development  of  more  efficient 
payment  instruments  as  the  true  costs  are  hidden  to  the  consumers  via  cross-
subsidisation. 

While  joining  fees  for  banks  vary  considerably  across  the  EU  networks,  payment 
systems  in  some  Member  States  (e.g.  Belgium,  Denmark,  Finland)  impose 
particularly high joining fees, thus directly dissuading new entrants to join the circle 
of members. The analysis of the membership fee level showed that the magnitude of 
joining/membership fee levels may not be solely explained by the size of the country 
in question. 

2.1.1.5.  Preferential bilateral fee agreements 

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By  concluding  and  acting  on  a  basis  of  preferential  interchange  agreements, 
monopoly  players,  involved  in  both  issuing and  acquiring  activities,  may  indirectly 
have  obstructed  new  entry  by  not  applying  the  same  favourable  conditions  to 
newcomers,  thus  raising  their  costs  of  entry.  Preferential  bilateral  interchange 
agreements16 ('on-us' interchange fees) existed at least in Portugal, Belgium, Austria, 
Spain and UK. Since the publication of the Commission's Interim Report on payment 
cards  in  April  2006,  banks  in  most  of  these  countries  have  started  to  review  their 
interchange  fee  arrangements  and  the  Commission  sees  first  developments  in  these 
markets. 

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In  the  UK,  Ireland  and  Finland  the  existence  of  bilateral  clearing  arrangements 
between local banks make market entry more difficult. As a rule, new entrants need 
to  find  a  sponsoring  bank  for  transaction  clearing,  which  in  general  is  not  keen  on 
assisting potential competitors. 

2.1.2.  Payment systems other than payment cards 

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Access  to  clearing  and  settlement  systems  is  necessary  for  any  bank  considering 
entering  a  retail  banking  market  and  intending  to  offer  customers  core  banking 
services such as current accounts. The operators of the established infrastructures are 
potentially in a position to create entry barriers which may take a variety of forms: 

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Different  classes  of  membership  and  special  requirements  for  direct  member: 
National  clearing  systems  distinguish  to  varying  degrees  between  classes  of 

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The definition of 'co-branding' may vary across card networks. It generally refers to the presence of the 
logo of the card network and a second logo (of another network or a non-bank) on the face of the card.  
'Surcharging'  is  an  option  available  to  merchants  to  request  additional  fees  for  the  use  of  the  most 
expensive payment instruments. 
Transactions under preferential fee agreements are also known as “on-us” transactions, i.e. transactions 
where  the  issuer  and  the  acquirer  are  the  same  or  belong  to  the  same  group.  In  contrast,  “off-us” 
transactions are transactions where the issuer and the acquirer are different credit institutions. 

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membership.  In  some  cases  these  membership  arrangements  may  distort  the 
conditions  under  which  individual  member  institutions  concerned  compete 
with  each  other,  or  under  which  potential  new  members  can  compete  with 
incumbents. 

The ‘need to be a bank’ requirement: Most clearing systems admit only banks. 
This  scrutiny  may  help  guaranteeing  financial  stability  but  could  hinder  the 
entry of non-bank players in payment systems, in particular if there were other 
efficient ways to ensure the financial reliability.  

Membership fees and fees structure: In some Member States, the fee structure 
of payment systems – e.g. the level of joining fees and per transaction fees – 
could  act  as  a  barrier  to  competition  for  new  or  small  players  in  the  retail 
banking market.  

Need  to  adapt  to  different  national  standards:  Payment  providers  have  to 
observe  different  technical  specifications  to  enter  different  national  payment 
systems, as well as a testing and certification procedure. In some systems this 
can take as long as twelve months and lead to high costs. 

Interchange fees for credit transfer and direct debit: In Member States where 
interchange  fees  are  agreed  upon,  such  fees  may  distort  competition  between 
different  means  of  payment  and  competition  to  provide  payment  services  to 
customers.  Competition  between  means  of  payment  may  be  distorted  where 
banks  have  an  incentive  to  promote  the  use  of  payment  means  with  high 
interchange fees. 

2.2. 

Credit registers 

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Open  and  affordable  access  to  good  quality  credit  data  is  an  important  prerequisite 
for  banks  wishing  to  provide  core  retail  banking  products  such  as  mortgages, 
consumer loans and credit cards. However, widespread credit data are not available 
in several Member States, whether because of regulation or the limited development 
of credit data markets17. 

Moreover,  evidence  gathered  during  the  sector  inquiry  suggests  that  aspects  of  the 
operation  of  credit  registers  in  some  Member  States  may  be  incompatible  with 
competition  law.  In  at  least  two  Member  States,  credit  registers  owned  and  run  as 
joint ventures among domestic banks appear to offer access to data on discriminatory 
terms, thereby discouraging potential entrants to the banking market. 

2.3. 

Cooperation between banks 

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Retail  banks  co-operate  in  a  variety  of  areas  such  as  the  setting  of  standards  and 
infrastructures or the operation of payment systems. Savings and cooperative banks 
traditionally have even closer co-operative ties. These specific types of banks cover a 
significant proportion of the retail banking activities in Europe and play an important 
role  in  several  Member  States  such  as  Germany,  France,  Austria,  Italy  and  Spain. 

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Clearly the establishment and operation of credit registers must fully comply with Member States' data 
protection legislation. However, a full assessment of compliance is beyond the scope of the inquiry. 

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However, ownership and company structures, the level of co-operation and specific 
regulatory  and  prudential  provisions  vary  enormously  between  Member  States18.  A 
uniform assessment is therefore impossible. 

Insofar  as  savings  and  co-operative  banks  remain  legally  independent,  they  tend  to 
co-operate  in  a  variety  of  fields,  i.e.  running  their  own  payment  infrastructures, 
having a joint risk management and protection scheme for deposits or even having a 
common business and marketing strategy including a common brand. Some savings 
banks and/or co-operative banks apply the regional or territorial principle, reserving 
a defined geographic area for the activities of an individual retail bank. 

Co-operation between banks can result in economic and consumer benefits. It usually 
does so where the banks involved are SMEs and jointly do not possess a significant 
market share. Where independent banks with a significant combined market position 
enter  into  cooperation  with  the  object  or  effect  of  limiting  competition  among 
themselves  or  excluding  new  entrants,  however,  effective  competition  can  be 
impeded. In such cases, the Commission could consider a more in-depth analysis to 
address the potential competition problems caused by coordination that goes beyond 
the strictly necessary to achieve any pro-competitive benefits. 

32. 

In case of competition problems, the Commission, therefore, has to analyse whether 
indicated anticompetitive behaviour is induced or maintained by legislation or other 
state measures. 

2.4. 

Setting of prices and policies 

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The  decisions  of  retail  banking  customers  are  also  constrained  by  information 
asymmetry and high switching costs. Information asymmetry will vary according to 
the  complexity  of  products  being  sold  and  the  transparency  of  prices.  Clear  and 
transparent information for consumers may help to reduce information problems. In 
addition,  authorities  in  several  Member  States  are  working  to  improve  consumers’ 
financial awareness.  

High  switching  costs  also  limit  the  mobility  of  customers.  Some  level  of  non-
financial switching costs appears unavoidable for products such as current accounts, 
where the administrative burden of switching – and consumers’ perception of it – can 
discourage consumers from changing supplier. However, the inquiry has found that 
some banks create artificial barriers (e.g. tying19 banking products or imposing high 
closing  charges)  which  raise  switching  costs  for  consumers  and  thus  reduce  the 
intensity of competition.  

35. 

The  inquiry's  data  show  that  customer  mobility  in  current  account  markets  is 
generally low. High customer satisfaction may partly explain low levels of mobility. 

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For  instance,  savings  banks  are  still  publicly  owned  and/or  managed  in  some  Member  States  such  as 
Germany, Luxembourg and, to a substantial extent, Spain. They are totally privatised in others, mainly 
in  the  new  Member  States,  restructured  into  a  co-operative  group  form  (France)  or  consist  of  hybrid 
structures with private and publicly owned savings banks alongside (Austria, Italy). Co-operative banks, 
on the other hand, are in general based on the principle to provide banking services to their owners, who 
are not permitted to own (or sell) a controlling number of shares.  
Tying  occurs  when  a  bank  makes  the  purchase  of  one  product  (e.g.  a  mortgage)  conditional  on  the 
acceptance of another separate product (e.g. a current account). 

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However, the inquiry's analysis also suggests  that banks may  have greater scope to 
exercise market power where customers are less mobile. 

Prices for retail banking products vary substantially across Member States. However, 
the inquiry has found that at national level there is evidence of convergent behaviour 
in  pricing  and  policies  for  core  retail  banking  products.  In  current  accounts  such 
convergent  behaviour  can  be  seen  in  relation  to  the  setting  of  several  parameters 
including account management fees, closing charges, ATM fees and default charges.  

Product tying is an additional aspect where banks in the majority of Member States 
demonstrate convergent behaviour. Tying can weaken retail banking competition by 
raising  switching  costs,  reducing  price  transparency  and  discouraging  the  entry  of 
new players (especially mono-line suppliers). The inquiry’s market survey suggests 
that  in  most  Member  States  the  majority20  of  banks  tie  a  current  account  to 
mortgages,  personal  loans  and  SME  loans.  Moreover,  where  the  largest  bank  in  a 
Member  State  ties  its  products,  the  inquiry’s  data  suggests  that  the  majority  of  its 
competitors choose to follow suit. 

POSSIBLE NEXT STEPS 

Based on the evidence gathered in the sector inquiry, the Commission recommends a 
range  of  measures  to  strengthen  competition  in  retail  banking,  including  in  the 
market for payment cards.  

3.1. 

Competition law enforcement 

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Antitrust  enforcement  may  be  able  to  address  several  of  the  competition  issues 
identified  in  the  sector  inquiry.  Areas  for  potential  action  include  firstly  access 
barriers,  discriminatory  rules,  fee  structures  and  governance  arrangements  in  some 
payment card networks and clearing and settlement systems.  

Secondly,  enforcement  action  might  also  be  appropriate  in  relation  to  high 
interchange fees and merchant fees in some payment card networks.  

Thirdly, the Commission may gather further information in order to assess whether 
cooperation between savings and/or co-operative banks that have significant market 
positions appreciably restrict competition either between themselves or in relation to 
other actual or potential competitors. 

Fourthly,  some  forms  of  product  tying  by  some  banks  may  be  inconsistent  with 
competition law, for example where tying constitutes an abuse of dominance in the 
relevant product markets.  

Finally, antitrust enforcement may also be appropriate to address access barriers and 
discriminatory rules in relation to credit registers. 

The ‘majority’ of banks refers to banks in the Commission’s market survey holding a combined market 
share of more than 50%. 

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44. 

Any  possible  enforcement  procedures  would  require  a  full  examination  of  the 
specifics of each case in consultation with the national competition authorities. 

3.2. 

Regulatory and self-regulatory measures to address competition concerns 

3.2.1.  Payment systems 

3.2.1.1.  Single Euro Payments Area (SEPA) 

45. 

46. 

47. 

Several  of  the  competition  barriers  that  the  sector  inquiry  has  highlighted  may  be 
remedied  through  the  establishment  of  a  pro-competitive  SEPA.  For  payment  card 
networks  SEPA  offers  the  potential  to  remove  many  restrictive  rules.  The 
Commission will pay particular attention to ensure that co-branding restrictions are 
not used to compartmentalise markets21. 

The SEPA framework for payment cards should provide retailers with greater choice 
of  supplier  for  acquiring  services,  opening  up  greater  competition  in  this  highly 
concentrated market22. 

To  ensure  the  proper  functioning of  the internal  market, the  European  Commission 
has the right to propose legislative measures. The Commission’s proposed Directive 
on  payment  services23  will  prohibit  access  restrictions  to  payment  systems  and 
infrastructures based on institutional status. This Directive is now in discussion in the 
Council  and  the  European  Parliament.  Its  implementation  will  enable  citizens  to 
benefit  from  more  competitive  and  efficient  payment  services.  Within  SEPA, 
payment  card  networks  and  clearing  and  settlement  systems  should  not  be  able  to 
distort competition by imposing discriminatory rules and governance arrangements.  

48. 

The Commission, together with the national competition authorities, will continue to 
monitor  the  compatibility  of  the  SEPA  framework  with  competition  law,  as 
requested by the Ecofin Council24. 

3.2.2.  Credit registers 

49. 

The  sector  inquiry  has  found  that  the  principle  of  non-discriminatory  reciprocal 
access to credit registers is not yet fully applied. Significant barriers also remain to 
cross-border data sharing. The proposal for a Directive on Consumer Credit requires 
Member  States  to  ensure  cross-border  access  to  credit  registers  on  a  non 
discriminatory basis25. The Commission is examining these issues in relation to the 

21 

22 

23 
24 

25 

This could for example be the case if an international cards scheme deems another scheme a competitor 
simply because it decides to operate outside its home Member State. 
It  should  be remembered  that  in  some  Member  States retailers  currently  face  only  one ‘offer’ from  a 
monopoly provider of acquiring services (see paragraph 17 for details). 
See: http://ec.europa.eu/internal_market/payments/framework/index_en.htm  
See Council Conclusions on SEPA, 10 October 2006: 
http://www.consilium.europa.eu/ueDocs/COUNCIL-LIVE/20061010_14209_6.PDF 
See: http://ec.europa.eu/consumers/cons_int/fina_serv/cons_directive/2ndproposal_en.pdf. The relevant 
provisions are contained in Article 8. 

EN 

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European mortgage market26. A future examination may also be warranted to assess 
compatibility with an open and competitive European credit market. 

50. 

Authorities  that  wish  to  enhance  competition  and  efficiency  in  credit  markets  may 
wish to consider regulatory reforms concerning credit data sharing, notably to enable 
wider coverage of credit registers. However, the frameworks for data protection and 
credit data sharing are sensitive matters and require careful scrutiny by Member State 
governments.  In  a  small  number  of  Member  States  the  inquiry  has  identified 
concerns that credit registers may not be fully observing data protection rules. 

3.2.3. 

Setting of prices and policies 

51. 

52. 

4. 

53. 

54. 

26 

27 

EN 

There  may  be  a  case  for  examining  the  effects  of  tying  on  competition  in  specific 
banking  product  markets.  Authorities  in  a  small  number  of  Member  States  have 
introduced regulations to limit or prohibit product tying in retail banking. 

The  Commission  has  launched  an  expert  group27  to  examine  customer  mobility  in 
relation to bank accounts. The group is considering measures to facilitate the opening 
and switching of bank accounts on a domestic and cross-border basis, by examining 
its 
best  practices 
recommendations in the first half of 2007. 

the  Member  States.  The  expert  group  will  present 

in 

CONCLUSION 

This sector inquiry identified four key issues that will need to be followed up by the 
Commission and national competition authorities:  

•  the design and operation of payment systems, including card payment systems;  

•  credit registers;  

•  cooperation between banks; and  

•  the setting of banks' prices and policies, including product tying. 

The  European  Commission  will  not  hesitate  to  exercise  its  powers  of  enforcement 
under Articles 81, 82 and 86 EC, to ensure that the competition rules are respected in 
retail  banking;  and  with  respect  to  the  various  payment  markets  and  the  SEPA 
project in particular. The European Commission will also continue its efforts in fields 
other than competition law to further increase the benefits of the internal market in 
retail banking to its citizens. 

The  Commission’s  Green  Paper  on  mortgages,  published 
http://ec.europa.eu/internal_market/finservices-retail/home-loans/integration_en.htm#greenpaper  
See: http://ec.europa.eu/internal_market/finservices-retail/baeg_en.htm  

in  July  2005, 

is  available  at: 

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