EU launches competition inquiries into retail banking and business insurance

Ireland's Finfacts Team
June 13, 2005

The European Commission has decided to launch sector inquiries in financial services in the European Union in the areas of retail banking and business insurance.

The inquiries will examine whether competition is working in these markets and whether markets are competitive enough to deliver their full benefits to consumers. The inquiries will be complementary to the Commission’s parallel initiatives to remove regulatory barriers within the Single Market for financial services. In carrying out the sector inquiries, the Commission will work closely with market participants and Member State authorities. The Commission will begin its inquiries with an investigation into retail banking, and in particular payment cards. The inquiries into other aspects of retail banking and into business insurance will follow later in 2005.

Competition Commissioner Neelie Kroes said, “These inquiries are an important first step in allowing the Commission to identify ways to improve competition in EU financial markets and thus increase the competitiveness of the EU economy. They are not quick fixes, but show my commitment to using the competition rules to effect long term structural improvements to the EU economy.”

Financial Services Commissioner Charlie McCreevy added “I fully support these competition sector inquiries into retail banking and business insurance. They are a useful complement to the Commission’s efforts to tackle regulatory barriers within the Single Market for financial services”.

Better functioning financial markets are a necessary precondition for reaching the Lisbon agenda goals offering a more efficient access to finance and insurance for businesses, and thus boosting competitiveness and innovation. Considerable progress towards integrating EU financial markets has already been achieved through legislation to ensure freedom of establishment and freedom to provide services between Member States, notably in the framework of the Financial Services Action Plan. Ideas to further integrate EU financial markets are the subject of a new Commission Green Paper. The competition sector inquiries will complement these efforts by examining possible obstacles to competition that may persist.

In particular, the competition sector inquiries will gather information in the retail banking and business insurance sectors with a view to identifying possible distortions of competition that can be addressed under EC Treaty rules on restrictive business practices and abuse of monopoly power (Articles 81 and 82), either by the Commission or by national competition authorities within the European Competition Network. If the inquiries reveal the existence of anticompetitive practices the Commission is prepared to take appropriate measures to restore competition in the relevant markets.

To carry out these inquiries, the Commission can require companies or trade associations to supply information, documents or statements. In the course of the inquiries, the Commission intends to maintain an open dialogue with representatives from industry and consumer associations, and will inform market players and consumers about the progress. The main results of the inquiries will be published from 2006.

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