IP/07/1522

Brussels, 17th October 2007

Anti-trust: Groupement des Cartes Bancaires restricts competition by hindering the issuance of cards at competitive prices

The Commission has addressed a decision to Groupement des Cartes Bancaires "CB" (France) in which it concludes that the latter has infringed the EC Treaty rules prohibiting practices which restrict competition (Article 81). The Groupement has adopted price measures which hinder the issuing of cards in France at competitive rates by certain member banks, thereby keeping the price of payment cards artificially high to the benefit of the major French banks. Consumers are the victims of this illegal practice, which deprives them of cheaper cards and a more diversified product offering. The decision orders the Groupement to annul the measures concerned with immediate effect and in future to avoid taking any measures with a similar purpose or effect.

Competition Commissioner Neelie Kroes said: "This decision underlines the fact that, to ensure the greatest possible benefit to consumers, the single euro payments area must be an area of competition. The Commission cannot tolerate behaviour that goes against the objectives of SEPA by seeking to partition a national market".

Groupement des Cartes Bancaires manages the system of payments by "CB" card, which accounts for over 70% of card payments in France. Visa and MasterCard cards issued in France operate within this system as "CB" cards. The Groupement, which has around 150 members, is managed by the biggest French banks: Crédit Agricole, Crédit Lyonnais, Crédit Mutuel, Crédit Industriel et Commercial, Société Générale, Crédit du Nord, BNP-Paribas, Natexis - Banques Populaires, the savings banks, the Post Office and Crédit Commercial de France.

The disputed measures are the 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 and by the major French banks 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 on each card issued should be paid by member banks that are not "sufficiently" active in terms of acquisition of merchants or installation of automated teller machines (ATMs).

The other measures are: a membership fee of €12 per card, an additional membership fee and a “sleeping member” fee (“mécanisme de réveil des dormants”) of €12 per card issued in excess of a maximum number of cards stipulated by the Groupement.

The Groupement claims that these measures are necessary in order to combat free-riding on the investments made by the main incumbent banks and encourage new competitors of the major banks to acquire merchants and install ATMs.

However, the Commission's investigation has revealed that the measures have the opposite effect to the Groupement's stated purpose.

Restriction of competition

On the basis of the very make-up of the measures, information on prices, the number of cards issued and the documents obtained during inspections in May 2003 at the premises of the Groupement and of the major banks which have adopted the measures, the Commission has reached the conclusion that these charges were introduced to restrict competition in the French payment card market and that this has in fact been their effect.

The adoption of restrictive measures was made possible by the distinction made in the contract establishing the Groupement between the major banks that are members of its Board of Directors and the other members (which include the banking arms of large retailers such as Carrefour and Auchan, and Internet banks). Only Board members can adopt price measures without needing first to consult or inform the other members or obtain their votes in support of the measures.

The Commission has analysed the measures concerned as a decision by an association of undertakings taken solely by the Groupement. The Commission has decided not to impose a fine 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 (since the entry of force of Regulation No 1/2003 this possibility no longer exists).
Implementation of the measures was suspended in 2004 pending a Commission decision on their compatibility with Community law. However, they continue to have an effect on the market, since 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.

See also MEMO/07/413.