ANTITRUST AUTHORITY GIVES CONDITIONAL GO-AHEAD TO PURCHASE OF CARTASÌ  BY ISTITUTO CENTRALE DELLE BANCHE POPOLARI

Commitments proposed by ICBPI accepted and rendered binding in order to avoid creation of a dominant position in issuance and management of credit cards. Links with competitor SIA-SSB dissolved.

The Italian Competition Authority, at its meeting on 26 March 2009, decided to authorize the full takeover by Istituto Centrale delle Banche Popolari Italiane (ICBPI) of SI Holding, after accepting and rendering binding the commitments presented by the company. The measures imposed are intended to prevent the takeover from creating a dominant position in the issuing of credit cards, in signing up retailers and in computerized processing with regard to international cards used in Italy.

The Authority studied the merger in the light of changes taking place in the credit card market where the big banks are bringing this business in-house while small and medium banks prefer to make use of third parties or to purchase either the whole ‘package’ of services (issuance, contracting of retailers, IT services) or individual services. In this context, the takeover, in the absence of the necessary corrective measures, would have significantly reduced the small-medium banks' options and would have increased the market strength of the post-merger company: in the areas of card issuance and contracting of retailers the new operator, having an extremely high market share in a fragmented competitive context, is the only provider of services for third parties. Moreover, ICBPI would have had stronger structural and personal links with SIA-SSB, the main potential competitor for the provision of IT services, because of the sum of the relationships of SI Holding and the pre-existing relationships with ICBPI.

The measures adopted are intended to:

1) Ensure, by way of transparency in economic conditions and the ‘unbundling’ of the services offered by ICBPI, that the banks have a choice
The new company has guaranteed full contractual transparency in terms of conditions and prices applied to the services provided so that the different possible models for the banks (in-house or outsourced) can be properly compared. ICBPI also undertook not to oblige its customers to purchase the complete package of services it offers. In this way, the customer banks can choose a mix of suppliers.

2)Influence pricing policy so as to restrain the merged company's market strength
ICBPI has undertaken to provide its services to non-shareholder customers on the same conditions as applied to customers who are its shareholders: this restriction should lead to pricing policies that restrain the company's market strength.

3) Guarantee transparent methods of selection in any choice of IT service provider
ICBPI has undertaken, should it turn to third parties for the management of IT platforms and applications, to make a transparent selection based on the best economic offer (price and quality of service provided).

4) Eliminate links with the main competitor for IT processing
ICBPI has undertaken to sell its shareholding of 3.1% in SIA-SSB, the major operator in the IT processing market. That link prevented SIA-SSB from being considered a full-blooded competitor to ICBPI. ICBPI has also committed to excluding from Boards of Directors throughout its group any persons who are present in the  governance of companies that compete in the credit card business in Italy. That commitment would seem to be adequate to exclude the establishment in the future of any personal links, thus overcoming the risk of entanglements among competitors.

Rome, 27 March 2009