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MEMO/05/204

Brussels, 13th June 2005

Financial services sector competition inquiry – frequently asked questions

(see also IP/05/719)

What is a “sector inquiry”? Why not just open a case if there is a problem?

The Commission uses sector inquiries when it wants to improve its knowledge about a particular sector, and to understand the obstacles to competition in that sector. Essentially the Commission opens a sector inquiry if it has concerns that competition may not be working as it should, but the reason for that is not clear.

Sector inquiries are first of all an information-gathering exercise that provides the Commission with in-depth knowledge about markets and is therefore ‘upstream’ of proceedings in specific cases. The knowledge gained about the market can form the basis of specific enforcement initiatives at a later stage.

How will the Commission cooperate with consumer associations, banks and insurance companies in these inquiries?

The Commission wants an open dialogue with consumer associations, banks, insurance companies and their associations in order to prepare and carry out the inquiries. The Commission is holding a series of meetings with stakeholders in order to gather their views and take those views into account. This process of dialogue will be continued throughout the inquiry.

Will the inquiries cover all 25 Member States? Which Member States will be concerned by the sector inquiries?

The inquiries will cover the 25 Member States. The inquiries may focus on some particular products, services or issues and could therefore also focus on particular Member States.

Why is the Commission investigating retail banking?

The main concern of the Commission is to ensure that consumers in the EU benefit from a competitive and integrated financial market. Retail banking markets in the EU are not yet integrated. For example, prices for comparable retail banking products vary considerably across the European Union. Although domestic pricing of banking products can also be quite diverse, price differences tend to be smaller within a given domestic market than between domestic markets in the European Union. Also, a number of factors, such as switching costs and product bundling, may lead to customer captivity or otherwise affect customer choice.

Which retail banking products and services will be examined?

The inquiry will start with payment cards but will then move on to other areas. At this point no specific retail banking product or/and service has been excluded. Issues to be investigated include conditions for market entry, state of competition between payment networks, and the degree of effective choice for consumers and SMEs.

Which companies will be requested to provide information in the two sector inquiries?

For the inquiry into retail banking, the Commission will request information from banks and other financial institutions which provide retail banking services, as well as providers of payments services and other infrastructure and upstream services, including associations.

For the sector inquiry into business insurance, information will be collected from insurance companies, reinsurers, intermediaries and other providers of insurance products and services including insurance associations.

In carrying out the investigations, information will also be collected from users of financial services, including consumer organisations and, where appropriate, Member State authorities.

Why is the Commission investigating business insurance?

The Commission is concerned that in some areas of business insurance (the provision of insurance products and services to businesses) competition may not be functioning as well as it could. In the business insurance sector the size of risks to be covered and clients’ level of information and access to expertise tends to be higher than in retail insurance markets, which could allow for more possibilities for cross border competition. At the same time the availability of insurance cover at favourable rates and terms is an important factor for businesses’ competitiveness.

Which business insurance products and services will be examined?

The Commission currently plans to look into different types of business insurance and does not exclude from its investigation any particular insurance product or service. Products and services to be investigated may include, for instance, property and casualty insurance and reinsurance. Insurance and reinsurance intermediation will also be a part of the inquiry.

Are intermediaries concerned?

Yes. Intermediaries are the predominant channel of insurance distribution, and have an important role in providing expertise and advice to their clients.

What is the timing of the sector inquiries? When will there be reports?

The decisions to launch sector inquiries have been taken on 13th June 2005. The two inquiries will be executed following a phased approach. The first part of the sector inquiry in retail banking will address competition issues in the area of payment cards. A report containing main findings may be released in 2006. Preparatory work for the second part of the inquiry in retail banking as well as the inquiry in business insurance will start already in 2005 with reports to be published from 2006. Throughout the inquiries and prior to publishing the reports the Commission will continue a process of dialogue and consultation with stakeholders.


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