MasterCard abused its dominant position

The Gazdasági Versenyhivatal (GVH – the Hungarian Competition Authority) established that MasterCard Europe SA (MasterCard) abused its dominant position through its exclusionary practice of not decreasing its interchange fees of its consumer debit cards issued in Hungary to the level of Visa's interchange fees. This behaviour took place from 8 February 2011 to 31 December 2013.

The European Commission (Commission), as the competition authority at European level, carried out several proceedings against card issuer companies relating to interchange fees. The interchange fee is the fee that a merchant's bank (the "acquiring bank") pays a customer's bank (the "issuing bank") for the acceptance of card based transactions. The level of which in Hungary is defined by the card issuer companies.

Because of the commitments offered by Visa and accepted by the European Commission, Visa faces an upper limit since 2011 on its interchange fees on domestic transactions made by consumer debit cards, while MasterCard faces no such limitation.

The credit and debit card market is a special market where the competition of card companies located in the upstream level of the market leads to an increase in interchange fees. The reason for this is that the card issuing banks receive an income from interchange fees and therefore they choose those card companies which are able to determine the extent of interchange fees at a higher level.

MasterCard was a dominant undertaking in the Hungarian debit card market in the relevant period and the upper limit placed on Visa’s ability to determine interchange fees strengthened even its position so that it had an unchallengeable competitive advantage vis-à-vis Visa.

MasterCard, aware of the above mentioned facts, determined the level of its interchange fees in a manner which further weakened the already weak competition resulting from MasterCard's dominant position in the market.

Consequently, the GVH concluded that MasterCard had abused its dominant position.

The GVH established the infringement and also imposed a fine on MasterCard. In determining the amount of the fine to be imposed, the GVH took into account 10 percent of the relevant income of MasterCard’s debit card turnover in the investigated period.

As a mitigating factor, when determining the amount of the fine, the GVH took into account the novelty of the infringing conduct of MasterCard, and consequently imposed a fine of 88 million HUF (approx. 284 thousand EUR).

Case number: Vj/46/2012.

Budapest, 1 February 2016

 

Hungarian Competition Authority

Further information:
Andrea BASA
Spokesperson
Alkotmány u. 5., H-1054 Budapest,
Tel: +36 1 4728902
Mobile: +36 30 6186618
Email: basa.andrea@gvh.hu , press@gvh.hu
http://www.gvh.hu

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The GVH has imposed a fine of more than HUF 4 billion (EUR 13 million) for information cartel

The Hungarian Competition Authority (GVH) established in its decision that Magyar Bankszövetség (Hungarian Banking Association) – with the collaboration of Nemzetközi Bankárképző Központ Zrt. (International Training Centre for Bankers Ltd.) – had been operating the so called “BankAdat” database for 12 years in a way that was likely to restrict competition, as it had made it possible for the banks to share private, confidential and strategic data with each other. The GVH imposed a total fine of HUF 4.015 billion (approx. EUR 13 million) for the infringement.

According to the decision of the GVH, the information flow that took place in the operation of the BankAdat database amounted to horizontal information exchange, thereby infringing the competition law of both Hungary and the European Union.

The private, confidential and strategic data (e.g. data relating to quantities, costs, demand, profit) which was shared in the database by the members of Bankszövetség, ensured that the banks obtained up-to-date information about the market, market processes, efficiency, business policies and strategies of competitors. The concerned banks particularly used the available information for making business plans, creating strategies and for product development.

The GVH imposed a fine of HUF 4 billion (EUR 13 million) on Bankszövetség and HUF 15 million (EUR 50000) on Bankárképző.

When setting the fine, in the case of Bankszövetség the GVH regarded as a basis the sum of the interest, fee and commission incomes of the members providing the data in their reporting period from 2001 which incomes were realised as relevant market turnover on the retail and business segment; while in the case of Bankárképző the GVH considered as relevant turnover the turnover realised in relation to the operation of the database.

When establishing the sum of the fine, the GVH regarded as aggravating circumstances – among others – the following:

  • the uncovered information exchange led to an exceptionally wide range of data sharing and it also affected competition in the dimensions of price, quality and innovation;

  • the undertakings participating in BankAdat covered the domestic bank system almost entirely; their collective market share exceeded 80%.

The GVH took into account as a mitigating factor the following:

  • Bankszövetség and Bankárképző voluntarily abandoned the operation of the database after the initiation of the supervision proceeding;

  • the database is only partially unlawful.

Bankszövetség was an active member of the information cartel while Bankárképző played the role of a contributor. The GVH did not establish the direct responsibility of the member banks that provided data, because the decisions on the establishment and operation of the database were made by Bankszövetség itself. In its decision, the GVH specified the financial institutions that bear subsidiary liability responsibles (Budapest Bank, CIB, Erste, K&H, MKB, OTP, Raiffeisen, UniCredit, Magnetissimo, Banif, Commerzbank, Quaestor, FHB Kereskedelmi Bank, Gránit, KDB, Cetelem, Takarékbank, Sberbank, Merkantil, Porsche, Sopron Bank, Erste Lakástakarék, FHB Jelzálogbank, Fundamenta, OTP Jelzálogbank, OTP Lakástakarék, UniCredit Jelzálogbank, Axa, BNP, Citibank, Crédit Agricole, Deutsche Bank, ING), against which the recovery of the fine imposed can be arranged if the enforcement against the Bankszövetség cannot be realised.

The GVH accepted Bankszövetség's request to be allowed to pay the fine in instalments due to the fact that the membership fee revenues do not cover the fine; it shall therefore require its members to supply additional capital or it shall raise its membership fees.

The GVH terminated the procedure

  • with regards to the aggregated data that can be obtained from the BankAdat database, and

  • initiated against Kinizsi Bank, KELER, Exim Bank, Magyar Fejlesztési Bank and Mohácsi Takarék Bank.

Case number: Vj/08/2012

Budapest, 12 January 2016

Hungarian Competition Authority

Further information:
Andrea BASA
Spokesperson
Alkotmány u. 5., H-1054 Budapest,
Tel: +36 1 4728902
Mobile: +36 30 6186618
Email: basa.andrea@gvh.hu , press@gvh.hu
http://www.gvh.hu

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Cooperation agreement made between GVH and NKH

The aim of the cooperation agreement which has been made between the Hungarian Competition Authority (GVH) and the National Transport Authority (NKH) is to mutually help each other’s activity on the market of rail transport and passenger transport services.

The cooperation obligation between the GVH and the NKH is regulated by the acts on rail transport and on passenger transport services. Recently, the two authorities have successfully supported each other’s work, among other things, in certain competition supervision proceedings initiated by the GVH and in market research.

The aim of the present agreement is that when the GVH and the NKH carry out their duties,

  • they contribute to the reliable and transparent operation of transport markets and

  • their development, which is based on fair competition and facilitating effective competition,

  • and they enhance trust in certain transport services and passenger transport services.

A further aim of the agreement is the strengthening of the cooperation that exists between the presidents of the authorities. This will be achieved through expert consultations concerning the professional and practical issues faced by the authorities, and through discussions on joint law enforcement. Moreover, they shall inform each other if they identify a problem that involves the competence of the partner authority, or if in their opinion, an amendment of the law is necessary.

The intention of the GVH and the NKH is that a high level of cooperation and equal partnership will increase the efficiency of their law enforcement activities and other duties. Moreover, it will create an environment where, besides the cooperation provided for by law, they can mutually support each other’s activities and foster awareness and acknowledgment of each other’s work. In order to effectively carry out market surveillance activities, the two authorities continuously and mutually look for further forms of cooperation besides the ones provided for in this agreement in the area of subsectors of aviation, shipping and road transport.

The details of the cooperation between the GVH and the NKH can be found in the agreement made between the authorities, the full text of which is available on the webpages www.gvh.hu and www.nkh.gov.hu.

Budapest, 8 January 2016

Further information:

 Hungarian Competition Authority
Andrea BASA

National Transport Authority
Communication Unit

Spokesperson

 

Alkotmány u. 5., H-1054 Budapest,

Teréz krt. 38., H-1066 Budapest,

Phone: +36 1 4728902
Mobile: +36 30 6186618
, http://www.gvh.hu

Phone: +36 1 373 1487

www.nkh.gov.hu

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User-friendly operation – appointments for access to the file can be booked online

Since 4 January 2016, the Hungarian Competition Authority (GVH) has made it possible for parties to book appointments for access to the file online. The GVH is committed to operate in a user-friendly, transparent and predictable manner in order to assist market participants also in course of the competition supervision proceedings. The newly introduced development of the webpage has made it possible for parties and their representatives to book appointments for access to the file in a convenient electronic way.

This newly developed electronic system allowing parties to book appointments online for access to the file is provided by the Competition Council of the GVH on www.gvh.hu. The aim of the online booking system is to enable parties to more efficiently exercise their rights of access to the file, and is available in those cases where the entitlement to exercise the right of access to the file arises after 4 January 2016.

In order to use the booking system, the parties receive a code in the annex of the notice about the entitlement to exercise the right of access to the file. By using this code, the parties can very easily book an appointment on the new, user-friendly platform without being subject to a burdensome administrative obligation. The booking system and the related technical details are directly available on the main webpage of the GVH.

Through this development, the GVH intends to contribute to the evolution of a user-friendly, fast and efficient electronic public administration.

 

Budapest, 6 January 2016

 

Hungarian Competition Authority

 

Further information:
Andrea BASA
Spokesperson
Alkotmány u. 5., H-1054 Budapest,
Tel: +36 1 4728902
Mobile: +36 30 6186618
Email: basa.andrea@gvh.hu , press@gvh.hu
http://www.gvh.hu

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Administrative time limit governing simplified mergers decreases from 30 days to 8 days

The amendment to the Act on the Reduction of Public Administrative Bureaucracy, which entered into force on 1 January 2016, changes the administrative time limit of the Hungarian Competition Authority (GVH).

According to the new provision, a decision has to be made within 8 days in those cases which are subject to an administrative time limit of less than two months (the so-called summary procedures); consequently, also in simplified merger procedures conducted in accordance with the Hungarian Competition Act.

The GVH grants authorisation in a simplified merger procedure if the transaction in question will clearly not significantly reduce competition on the relevant market. An amendment to the Competition Act, effective from 1 July 2014, decreased the administrative time limit applicable to this kind of procedure to 30 days (from the previous time limit of 45 days). Last year, in most of these procedures the GVH made a decision in a shorter time than the time limit provided for by the Competition Act (the actual, average, net duration of simplified merger procedures – i.e. without calculating the number of days pursuant to the law that elapsed until the remedy of deficiencies –decreased to less than 20 days in 2015.)

The GVH highlights that a decision can only be made within 8 days if the party in question submits a fully completed application. Consequently, the applicability of this kind of procedure is dependent on the party submitting the application. The fullness and reliability of the data which are submitted by the party and the full and complete filling of the form which is used to submit an application substantially influence the duration of the procedure.

In merger procedures, the pre-notification contact, which has been available since 2012, plays an important role because an adequately prepared pre-notification contact (especially if it was initiated on the basis of a draft form) can decrease deficiencies in later procedures. Pre-notification contact is regulated in Notice No 4/2014 of the president of the Hungarian Competition Authority and the chair of the Competition Council of the Hungarian Competition Authority.

In the opinion of the GVH, summary procedures can primarily be applied in cases of so- called simplified decisions without justification. This type of decision was applied in one third of the cases in 2015.

This new type of procedure is in line with the series of measures (e.g. establishment of a separate Merger Section, new application form, possibility of pre-notification contact, simplified decision) which have been applied by the GVH in order to speed-up and increase the efficiency of the authorisation of mergers.

Budapest, 4 January 2016

 

Hungarian Competition Authority

Further information:
Andrea BASA
Spokesperson
Alkotmány u. 5., H-1054 Budapest,
Tel: +36 1 4728902
Mobile: +36 30 6186618
Email: basa.andrea@gvh.hu , press@gvh.hu
http://www.gvh.hu

Printable version in PDF

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