EU court rules against Portugal’s banking ‘cartel’

The European Court of Justice has agreed with the Court of Competition that information exchanges between banks in Portugal, however isolated, amount to the behaviour of running a cartel, thereby prejudicing competition.

In response to the Competition Court, which had sent the ‘banking cartel case’ to the EU Court of Justice to clarify whether the facts it gave as proven actually had an impact on customers, the European court replied that “an isolated exchange of information between competitors may constitute a restriction of competition”.

“It is enough that this exchange constitutes a form of coordination that, by its very nature, is necessarily, in a context such as that involving the exchange, detrimental to the correct and normal functioning of competition. Now, for a market to function under normal conditions, operators have to determine autonomously the policy they intend to follow and have to remain uncertain about the future behaviours of other participants,” reads decision.

In the “banking cartel” case, the Competition Authority slapped fines of €225 million on more than a dozen financial institutions in Portugal including the largest banks such as Caixa Geral de Depósitos (CGD), BCP, Santander, BPI and the former BES, accusing them of having exchanged sensitive information among themselves about spreads on loans or amounts granted in the previous month, in an anti-competitive scheme that harmed families and companies.

In the conviction decision, the Competition Authority concluded that “each bank knew, in particular detail, rigour and timeliness, the characteristics of the other banks’ offer”, promoting an environment in which other banks were discouraged “from offering better conditions to customers, eliminating competitive pressure, beneficial to consumers”.

Online news source ECO reported in April that the banks accused in the so-called “banking cartel” also face a claim for compensation filed by a consumer association that could amount to €6Bn. The association Ius Omnibus at the end of January filed several lawsuits aimed at forcing banks to reward families and companies for the damages caused by the practice of “concerting information in the credit market”, including spreads and concession volumes, restricting competition.