Competition Hinderance Ruling For Groupement Des Cartes Bancaires

“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.” So read the European Commission’s recommendation to the judgement of the Groupement des cartes bancaires.

Now, a couple of months later, the Commission’s voice seems to have been heard as the General Court has ruled in case T-491/07 that the Groupement’s practices hinder competition in the EU.

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.

In 2007, the Commission found that the Groupement had restricted competition by imposing certain tariff measures on new members and a ‘sleeper member fee’ on members that had not developed significant bank card business since their adhesion. The Commission found that the measure shut out new entrants (retailers’ banks, internet banks) from the market for the issuance of payment cards in France.

The General Court has now confirmed the Commission’s assessment of the French payment card scheme, by ruling against Groupement des cartes bancaires. This is the third judgment in eighteen months confirming the Commission’s enforcement of competition rules in the payment card market: MasterCard on 24 May 2012 and Visa on 14 April 2011. On 3 October 2012 the Commission announced in the Single Market Act II that it intended to propose revisions to the Payment Services Directive and to propose legislation on interchange fees for card payments to enhance the effective functioning of payment markets.