Brussels, 17th October 2007
Antitrust: decision adressed to "Groupement
des Cartes Bancaires" - Frequently asked questions
(see also IP/07/1522)
Doesn’t this decision attack a national system at the wrong moment,
now that the Single Euro Payments Area ("SEPA") is in the making?
Quite the contrary. The case highlights that large banks are not allowed to
use a domestic card system to keep foreign competitors at bay and maintain card
prices at artificially high levels for consumers.
Domestic systems will not be able to survive if their SEPA strategy is only
"defensive" in that they focus on excluding competition at home without ever
venturing outside their borders. To succeed in SEPA, card payment systems must
not establish national fiefdoms, but compete head to head with others and allow
for competition between banks within the system, to the benefit of
Do consumers benefit from the decision?
Yes, definitely. The tariff measures resulted in preventing certain banks,
perceived as a threat by the large French banks who are the main members of the
Groupement, from undercutting the prices applied by the large French
banks and from issuing as many cards as they otherwise would have.
This in turn, prevented consumers from enjoying lower card fees and a wider
choice of payment cards.
Which large French banks participated in the adoption of the measures?
The measures at stake were adopted by a decision of the
Groupement’s Board of directors of which -according to the
Groupement’s Formation Agreement- eleven banks are members:
Fédération Nationale du Crédit Agricole, the Crédit
Lyonnais, Crédit Mutuel, Crédit Industriel et Commercial,
Société Générale, Crédit du Nord, BNP-Paribas, Banque
Fédérale des Banques Populaires, Caisses d’Epargne, La Poste and
Crédit Commercial de France.
As several of these banks belong to the same banking group (Crédit
Agricole and Crédit Lyonnais; Crédit Mutuel and Crédit Industriel
et Commercial ; Société Générale and Crédit du
Nord), the Groupement’s Board of directors actually consists of the
eight largest banking groups in France ( LCL (Crédit Agricole-Crédit
Lyonnais), Crédit Mutuel-CIC, Société Générale,
BNP-Paribas, Banques Populaires, Caisses d’Epargne, La Poste and HSBC
(which controls Crédit Commercial de France).
Crédit Commercial de France did not participate in setting the
Which banks are detrimentally affected by the measures?
The tariff measures’ formula are such that the only banks which have to
pay significant amounts are recent or new Groupement members which solely
issue cards (or which are essentially card issuers) without having card
acceptance contracts with merchants or installing ATMs. These members are
typically the banking arms of large retailers (for example Carrefour, Auchan) or
on-line banks which do not and cannot have an important network of agencies
enabling them to conclude enough card acceptance contracts with merchants to
avoid paying the fees.
Why are the tariff measures restrictive by object?
Only specifically targeted members must actually pay the fees, sometimes for
The additional costs imposed by the tariff measures on Groupement
members that limit themselves to issuing “CB” cards (without
providing card acceptance services to merchants or installing ATMs) are €
11 per card (for the main measure, the so-called “MERFA”) and
€ 12 per card (for the other fee measures), which represents a significant
additional cost compared to the annual fee that cardholders pay to their
By putting certain members at a competitive disadvantage, the measures in
themselves restrict competition.
In addition, it results from the documents obtained by the Commission during
the inspections of the Groupement premises that the intention, expressed
during the preparation of the measures by the representatives of the
Groupement and of the largest French banks, was to hinder the competitive
advantage of these Groupement members.
Several of the documents obtained during the inspections show that the
representatives of the Groupement and of the largest French banks
anticipated a significant increase in card issuing by on-line banks and by the
banking arms of large retailers, at prices of €15 to €20, which they
considered as a "threat".
Why are the tariff measures restrictive by effect?
The Commission has monitored the prices charged and the number of cards
issued by certain new members targeted by the measures and by the main
Groupement members (the largest French banks), who benefit from this
The results confirm that the new entrants have not been able to issue cards
at the lower prices they intended to charge (€ 15 to € 20, which the
largest French banks and the Groupement decided to prevent), and that the
new entrants have not issued as many cards as they had planned before the
measures were adopted. The results also confirm that the main members have not
had to lower their prices in response to any competitive pressure from the new
Are the tariff measures still in force?
To date, the payment of amounts due under the tariff measures have not yet
been requested and, on 8 June 2004, the Groupement’s Board of
Directors decided to suspend the collection of the amounts due pending the
Commission decision on their compatibility with competition law.
However, strictly speaking, the measures are still in force: they have not
been cancelled and the Groupement announced that it would retroactively
collect all amounts due if the Commission took a decision declaring the measures
compatible with EU competition law.
In anticipation of such a retroactive collection, several banks have had to
set up financial reserves which affect their capacity to invest in products
attractive to consumers.
Are the tariff measures still producing effects?
The Commission’s survey of the prices charged and the number of cards
issued by the targeted Groupement members showed that, even after the
Groupement suspended the tariff measures on 8 June 2004, those members
continued not to issue cards at the lower prices anticipated by the Groupement
and its main members in the absence of the tariff measures.
There are two explanations as to why the measures continue to produce effects
in spite of their suspension:
1) the decisions to review issuing plans downwards and not to charge prices
as low as planned were taken before the measures were suspended and continue to
affect the market;
2) the banks targeted by the measures, pending a clarification of their
legal situation and exposed to the danger that the Groupement might lift
the suspension, choose as a matter of precaution to continue to issue fewer
cards than they would have wished.
Aren’t the tariff measures justified?
According to the Groupement:
1) the measures help to prevent new entrants from “free riding”
on the investments made by the other members; and
2) they respond to the need of stimulating merchant “acquiring”
(contracts between banks and merchants for card acceptance services) and the
installation of ATMs, which generates more benefits to the system than card
The Commission explains in its decision that:
1) the Groupement does not show what the supposed free riding consists of. It
does not indicate the nature or scale of the problem. The Groupement only
advances figures without clarifying the source or the method of calculation;
2) The Groupement has not been able to demonstrate an economic need to
balance the acquiring and issuing activities, which are remunerated
independently of the measures at stake. Moreover, the main tariff measure (the
so-called “MERFA”) does not in fact encourage acquiring.
How can measures taken by an association of undertakings acting on behalf
of all its members possibly be considered as discriminatory vis-à-vis
Although the tariff measures were adopted by an association of undertakings
acting on behalf of all its members and could be deemed to reflect the
collective will of all of its members, in practice only the main French banks
participated (as members of the Groupement’s Board of Directors) in
the decision-making process.
The decision of the Groupement to adopt the tariff measures actually
manifests the will of the large French banks and benefits them by penalising
other members specifically identified as a threat to the large banks.
How can tariff measures applicable to all members nevertheless be
considered as discriminatory vis-à-vis certain members only?
The formulae laid down by the measures to determine if a given member must
pay the fees - and, if so, which amount - are formally applicable to all
However, in practice, upon application of the formulae, only specifically
targeted members must actually pay sometimes significant amounts.
Why didn’t the Commission impose fines?
The Commission decided not to impose fines as the Groupement had
notified the tariff measures under the former regulation on the application of
the competition rules (17/62). This regulation, which was replaced by Regulation
1/2003 on 1 May 2004, allowed companies to submit measures for approval by the
Commission. This is no longer possible under the new Regulation.
Why did the Commission decide to carry out surprise investigations in
Groupement premises and large French banks if the new CB rules had
The Commission decided to proceed with on the spot investigations as this was
the most effective way to verify the serious doubts it had regarding the real
object and effects of the notified measures - aimed at putting new entrants at a
competitive disadvantage by increasing their costs and thereby maintaining the
price of cards in France above the level which would result from free
competition -, i.e. an object and effect quite different from what the
Groupement explained in its notification.
Why did the procedure last close to five years?
The measures were initially qualified in a first Statement of Objections of 8
July 2004 as a (non notified) agreement between the main French banking groups
and the Groupement.
In a second Statement of Objections of 18 July 2006, replacing the previous
one (which was withdrawn) and addressed only to the Groupement, the
measures were qualified as a decision of an association of undertakings notified
by the Groupement.
Moreover, the second Statement of Objections identified a restriction of
competition not only by object (like the first) but also by effect, and
contained a strengthened economic assessment.
The Groupement proposed commitments. Why did the Commission not
From the outset and every time it took a position on possible commitments by
the Groupement the Commission always clearly pointed out that any
commitment which would allow the Groupement to take measures with an
anti-competitive object or effects similar to those of the measures at issue,
would be unacceptable.
The Groupement nevertheless required that a possible Commission
decision on commitments under Article 9 of Regulation 1/2003 included a
reservation which could easily be interpreted as allowing the adoption of
measures similar to the “MERFA”, the main anti-competitive