The Commission for the Protection of Competition (CPC) has slapped a collective €31 million fine on payment processing company JCC and eight commercial banks for colluding to squeeze FBME Card Services out of the card payments processing market.
The companies must pay the fines within 30 days of the CPC’s announcement of its decision.
The complaint, filed by FBME Card Services (FBMECS) in January 2010, had been thrown out by the administrative court last year, but that decision was subsequently appealed with the supreme court, which in March this year reversed the previous decision.
In a 480-page report, the CPC describes how JCC Payment Systems Limited as well as eight banks engaged in collusion, price fixing and unfair pricing practices where card issuing and card payments processing are concerned.
The lenders in question are Bank of Cyprus, now-defunct Marfin Popular Bank Public Co Ltd, Hellenic Bank, USB Bank Plc, Alpha Bank Cyprus Ltd, Emporiki Bank Cyprus Ltd, National Bank of Greece (Cyprus) Ltd, and Societe Generale Cyprus Ltd.
They were all found to be in violation of the 2014 Competition Law as well as articles 101 and 102 of the Treaty on the Functioning of the European Union (competition rules applying to undertakings).
The material time is the 2009-2010 period.
The highest individual fine (€18 million) imposed was on Bank of Cyprus, for a number of violations.
Marfin was fined €7.7 million, JCC €1.7 million, Hellenic Bank €1.6 million, Alpha Bank €1.4 million, National Bank of Greece €233,972, USB €121,519, Emporiki Bank €160,851, and Societe Generale €94,102.
JCC breached competition rules via its decision to set up with its shareholders (banks) a single system for domestic interchange fees, which the CPC found restricted competition in the card-issuance as well as the card payment-acceptance markets in Cyprus.
JCC’s shareholders are Bank of Cyprus (75 per cent) and a consortium (25 per cent) comprising Hellenic Bank, National Bank of Greece AstroBank and Alpha Bank.
JCC also provides acquiring services to the following: Cooperative Central Bank, Societe Generale, USB Bank, cdbbank, EuroBank and RCB Bank.
An acquiring bank is a bank or financial institution that processes credit or debit card payments.
Additionally, JCC, which has a dominant market position in the card-processing market in Cyprus, was found to have engaged in predatory pricing in relation to fees charged for customer service rights.
The CPC also said that Bank of Cyprus, Marfin, Hellenic Bank, Alpha Bank and the National Bank of Greece engaged in unfair pricing in relation to domestic interchange fees.
Of the €18 million fine on Bank of Cyprus, €10.8 million related to its denying permission – without adequate justification – to FBMECS to process American Express cards.
Beyond the fines, the competition watchdog ordered JCC to undertake a number of steps ensuring these violations are not repeated in the future.
JCC was ordered, within three months of the decision, to amend all the service agreements so that they do not include certain restrictive terms.
The company must also within six months amend its charter so as to ensure that its board members are independent of the banks/shareholders in JCC. Board members must no longer hold any position or office in the companies in question.