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ANTITRUST AUTHORITY OBLIGES ABI TO WITHDRAW CIRCULAR ON COSTS OF CLOSING A BANK ACCOUNT


PRESS RELEASE



PRESS RELEASE


CURRENT ACCOUNTS: Antitrust Authority obliges ABI to withdraw circular on costs of closing a bank account


First application of interim measures stipulated in the Bersani law. Perceived risk of serious, irreparable damage to competition.

The Italian Competition Authority, at its meeting on 14 September 2006, decided to apply the new powers contained in the Bersani law and oblige ABI (Associazione Bancaria Italiana, or the Italian Banking Association) to suspend immediately the Circular it distributed on 7 August 2006 dealing with the application of new rules on unilateral changes to the contractual conditions governing current accounts.
The view of the Authority, which opened an inquiry into ABI's move, is that the Circular may constitute an anti-competitive arrangement in violation of Article 81 of the EC Treaty which risks causing serious and irreparable damage to competition.

The Circular, like every formal decision of an association that can influence the economic activities of its member companies, represents an "arrangement" and the Authority deems it not to be intended merely to provide information as to the substance of the recent changes in the rules. Instead, at various points, it furnishes  interpretations which may result in uniformity of action on the part of the member companies. In the Authority's view, ABI's Circular, in reviewing the strategic economic variables upon which competition among the member banks is based, provides an orientation which, on the one hand, clarifies the real and potential incentives to competition among the members, and on the other hand, facilitates maintaining the high costs imposed on customers wishing to close their accounts. The instructions provided, though they are not binding, are nevertheless such as to influence the conduct of the individual operators and represent a common point of reference which - by rendering aspects of their market strategies uniform - may reduce the level of uncertainty as to competitors' conduct in the marketplace.
The identification of general increases in industrial costs as a “justified reason" to change contractual conditions seems, for example, to be an  invitation to restrict competition: on the contrary, industrial costs are a strategic economic variable in what the banks can offer and could become the subject of a virtuous round of competition.
In a similar vein, the instruction contained in the Circular as to the new rules on the right of the account-holder to close his current account without closure charges may have a significant economic impact on the clientele. Indeed, the Circular indicates that charges may still be applied for the closure of services linked to the current account, such as those for the transfer of securities; these are often substantial. This orientation seems to be in restraint of competition in that it reduces the clientele's mobility, given that the prevalent commercial practice amongst banks is to link a current account to various other services (including portfolio management, hence the commissions on transfer).

Based on the new powers specified in Law no. 248 of 4 August 2006 (Bersani), the Authority may, where a cursory examination reveals the existence of a contravention, decide ex officio that interim measures must be adopted.In the case of non-compliance, the Authority may levy fines up to three percent of turnover.

The inquiry must be completed by 31 May 2007.



Rome, 18 September 2006