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IP/01/1796

Brussels, 11 December 2001

Commission fines five German banks for fixing the price for the exchange of euro-zone currencies

The European Commission today decided to fine five German banks a total of € 100,8 million for fixing the charges for the exchange of euro-zone currencies. In a clear violation of European antitrust rules, the banks in 1997 colluded to charge no less than 3 % for the exchange of euro-zone banknotes to compensate for the abolition of the buying and selling 'spread' at the dawn of 1999 when the euro was launched. "This behaviour was illegal, caused direct and irreparable damage to consumers and also gave a blow to citizen's confidence in the European single currency," Competition Commissioner Mario Monti said. "I am disappointed that the five banks did not reduce their charges to make good vis a vis consumers as was done by other banks in Germany and in other Member States".

Following are the banks found guilty of infringing article 81 of the EC Treaty and the respective fines :

Commerzbank AG :      28,0 million EUR

Dresdner Bank AG :      28,0 million EUR

Bayerische Hypo- und Vereinsbank AG :  28,0 million EUR

Deutsche Verkehrsbank AG:   14,0 million EUR

Vereins- und Westbank AG:     2,8 million EUR

According to the facts established by the Commission's cartel investigation, in late 1997 several German and Dutch banks concluded an agreement on a commission of about 3% for the buying and selling of euro-zone banknotes during the three-year period which preceeded the final arrival of euro notes and coins set for January 1, 2002.

On January 1, 1999, the bilateral exchange rates for currencies of the European Union countries which created the euro zone were irrevocably locked, putting an end to the lucrative selling and buying 'spread' charged by banks and bureaux de changes to exchange those euro-zone currencies.

The purpose of the agreement concluded by the group of German and Dutch banks was to recover about 90% of the "exchange margin" income after the abolition of the "spread".

Most banks reduced their charges to the benefit of consumers

Commission's investigations started shortly after the beginning of 1999 and concerned banks in seven countries which subsequently received Statements of Objections: Belgium, Portugal, Ireland, Finland, Germany, Netherlands and, eventually, Austria (see IP/00/704 and IP/00/784 for first four countries, IP/00/908 for Germany and Netherlands, and IP/00/1358 for Austria).

However, between April and the summer of 2001, one by one, starting with SNS of the Netherlands and including German banks other than those concerned by today's decision, the vast majority of the banks proposed to substantially reduce charges and drop them in total for account holders as from 1 October 2001. The banks thereby abandoned their collusive behaviour and recovered their freedom to set prices individually. After that the Commission agreed to end proceedings against the banks as it took the view that it would be in the consumer interest for it to secure an immediate and substantial reduction in the charges.

The Commission's unusual attitude was justified by the exceptional circumstances of the present case. Euro notes and coins will be introduced next January replacing the national currencies of the participating euro-zone countries and, therefore, putting an automatic end to the cartel behaviour.

«This reduction of charges and the deviation of the banks from their collusive behaviour not only produced immediate benefits for consumers but will also contribute to a smooth change-over to the euro », Mr Monti said.

German cartel

The Commission considers that the cartel entered into by the German banks represents a very serious infringement of the EC competition rules and justifies heavy fines.

However, because the effect of the cartel was limited to Germany and the Dutch border regions, the Commission categorised the case as a "serious infringement" for the purpose of establishing the starting fines see Guidelines on Fines

http://ec.europa.eu/competition/antitrust/legislation/98c9_en.html.

The difference in the final fines is in direct correlation with the size of the banks concerned. Commerzbank, Dresdner Bank and Hypo- und Vereinsbank are large banks and, therefore, it is necessary to set the fine at a level which ensures that it has a sufficiently deterrent effect.

Competition Commissioner Mario Monti said: "Banks are free to set the level of charges for exchanging currencies or other services, but they cannot get together to fix those charges. This is a very serious infringement of competition rules which has to be severely punished.

10 largest cartel fines: Total amount per case

*fines reduced by Court judgments

YearCaseTotal amount (€ million)
2001Vitamins855.23
1998TACA272.940
2001Graphite Electrodes218.8
2001Citric Acid135.22
1994Cartonboard*117.08
2000Amino acids109.990
1994Cement*109.335
2001German Banks100.8
1999Seamless steel tubes99.000
1998Pre-insulated pipes92.210

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