2004/138/EC: Commission decision of 11 June 2002 relating to a proceeding under Article 81 of the EC Treaty (Case COMP/36.571/D-1: Austrian banks — "Lombard Club") (notified under document number C(2002) 2091)

• Published date: 24 February 2004
• Date of Signature: 29 October 2004
• Subject Matter: Intese,concorrenza,Prácticas colusorias,competencia,Ententes,concurrence,relaciones exteriores,Acuerdo de Asociación,libre circulación de mercancías
• Official Gazette Publication: Gazzetta ufficiale dell’Unione europea, L 56, 24 febbraio 2004,Diario Oficial de la Unión Europea, L 56, 24 de febrero de 2004,Journal officiel de l’Union européenne, L 56, 24 février 2004,Diario Oficial de la Unión Europea, L 342, 18 de noviembre de 2004

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32004D0138

2004/138/EC: Commission decision of 11 June 2002 relating to a proceeding under Article 81 of the EC Treaty (Case COMP/36.571/D-1: Austrian banks — "Lombard Club") (notified under document number C(2002) 2091)

Official Journal L 056 , 24/02/2004 P. 0001 - 0075

Commission decision

of 11 June 2002

relating to a proceeding under Article 81 of the EC Treaty

(Case COMP/36.571/D-1: Austrian banks - "Lombard Club")

(notified under document number C(2002) 2091)

(Only the German text is authentic)

(2004/138/EC)

CONTENTS

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THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation No 17 of 6 February 1962 first Regulation implementing Articles 85 and 86 of the Treaty(1), as last amended by Regulation (EC) No 1/2003(2) and in particular Articles 3 and 15 thereof,

Having regard to the Commission decision of 11 September 1999 to initiate proceedings in this case,

Having given the undertakings concerned the opportunity to make known their views on the objections raised by the Commission in accordance with Article 19(1) of Regulation No 17 and with Commission Regulation (EC) No 2842/98 of 22 December 1998 on the hearing of parties in certain proceedings under Articles 85 and 86 of the EC Treaty(3),

Having regard to the final report of the Hearing Officer in this case(4),

After consulting the Advisory Committee on Restrictive Practices and Dominant Positions,

Whereas:

1. INTRODUCTION

(1) There was in the past in Austria a long tradition of agreements, mainly about interest rates and charges/fees, among Austrian banks, based well into the 1980s in some measure on statute law(5). Over the years the banks had created a close network of committees covering every conceivable subject within which, up until the unannounced investigation by the Commission in June 1998, they regularly (every fourth working day on average) coordinated their conduct with respect to every essential factor of competition. Being aware of the relevance of these agreements from an antitrust point of view, they tried (largely in vain as it turned out), through a mixture of evasiveness, deception and the destruction of records, to cover up or eradicate all traces of their meetings.

(2) In establishing the facts, the Commission was able to rely on a large number of seised original documents dating from the relevant period such as minutes of meetings, memoranda, records of telephone conversations, correspondence, etc. The express object, and profound effect, of these agreements was to restrict competition. This constitutes a clear, unequivocal infringement of Article 81 of the EC Treaty, which must be punished by a fine.

(3) The structure of this Decision is as follows: by way of introduction, a few features of the Austrian banking market which are essential to an understanding of this case are described (section 2). This is followed by a brief description of the most important banks and bank groupings involved, being addressees of this Decision, and of the products/services covered by the cartel (section 3). After a brief review of the main procedural steps (section 4), the background to and organisational structure, functioning and object of the rounds of talks/committees in the Lombard network are discussed (section 5). There follows a chronological account of the main cartel meetings between 1994 and 1998 (sections 6 to 11). A separate section is devoted to selected special committees (section 12). The main arguments put forward by the undertakings are then discussed. The legal assessment of the facts (section 14), some reflections on procedural issues (section 15) and a discussion of the necessary penalties (section 16) are to be found at the end of the Decision.

2. THE AUSTRIAN BANKING MARKET

(4) The very high level of public ownership in Austrian banks until recent times may help explain why the pursuit of profit took a back seat to the quest for increased turnover and higher market share. On their own admission, the responsible banking executives were not able to make calculations based on business economics(6). In the consumer lending sphere in particular this led, against a background of stagnating demand for credit, to oversupply(7) and hence to declining interest margins for the banks.

(5) Competition which leads to declining margins, to the point where prices fall below average costs, is normally considered by the undertakings concerned to be "destructive". In such circumstances the undertakings are faced basically with two alternatives. Either the steady decline in earnings leads to a shakeout (exit from the market or capacity reduction as a result of a merger) or the various players on the market try to restrict, as far as possible, the competition induced by the oversupply and thus to slow down or even stop the collapse in prices. The upshot is excessive prices and the artificial maintenance of inefficient market structures.

(6) The Austrian banks opted, at least in part, for the second alternative. Since, owing to the, in the banks' view, "uncontrollable risk", the possible scenario of a shakeout was not only regarded by the banks as a suitable starting point for business initiatives but also aroused "fear"(8), the banks strove to achieve "disciplined" and "orderly" competition brought about by agreement(9). Cartel agreements proved to be a welcome means by which to combat so-called "destructive, cut-throat competition", or free competition, as it might simply be termed(10). Episodes of more or less unrestricted competition used, however, to be described by the banks as "hyperactivity". Charges were seen in this context, not so much as a factor of competition, but more as "a joint earnings opportunity", to the detriment of customers(11). In fact, the Austrian banks' endeavours to achieve improvements in their margins by means of coordinated action, i.e. jointly at the expense of the consumer instead of individually at the expense of competitors, run like a leitmotif through this investigation. One bank itself admits that the cartel had the effect of preventing the necessary shakeout(12).

(7) Because of the extensive standardisation of products, the publication ("posting at the counter") of interest rates, and regular price comparisons by the media and consumer bodies, the Austrian banking market is on the whole highly transparent. In order to increase this transparency still further, to be better able to monitor compliance with the cartel agreements and to minimise the effectiveness of any secret competition, e.g. through deviations from published interest rates, Austrian banks regularly carried out extensive checks, "competition-monitoring exercises", on their competitors and reached agreement on "ongoing direct contact in respect of departures" from agreements "which are presumed/alleged to exist by customers/supposedly established"(13). "Should offers come to light which are at variance with the (agreed) principles", one of the cartel members assumed responsibility for "coordination and clarification of the facts"(14). That such checks were the rule can be seen from the minutes of a cartel meeting in July 1994, according to which the Bank Austria representative proposed that "competition-monitoring exercises be dispensed with in August"(15). In many cases, though, the temptation for the banks concerned to undercut the agreed rates and thereby increase their market share proved too great.

3. UNDERTAKINGS AND PRODUCTS CONCERNED

(8) Almost all credit institutions from every major segment(16) took part in the conduct at issue. After the long-overdue shakeout, four bank groupings are now in a strong position on the Austrian banking market: HypoVereinsbank-owned Bank Austria, the savings bank grouping together with Erste Bank, the agricultural credit cooperative grouping together with Raiffeisen Zentralbank, and Bank für Arbeit und Wirtschaft/Postsparkasse. Some distance behind is the credit union grouping together with ÖVAG.

(9) This Decision is addressed to the following credit institutions(17):

a) Bank Austria Aktiengesellschaft (hereinafter called BA)

Following BA's merger with Creditanstalt AG (hereinafter called CA)(18) on 23 September 1998, BA is now the largest bank grouping in Austria. As a result of an assets merger in early 2001, Bayerische Hypo-Vereinsbank AG (hereinafter called HVB) acquired sole control of the entire BA grouping(19). The BA grouping's market share comes to approximately 25 %. In the whole of Austria the grouping has some 470 branches and employs around 13000 people;

b) Erste Bank der österreichischen Sparkassen AG (hereinafter called Erste)

Since it merged with GiroCredit Bank Aktiengesellschaft der Sparkassen on 4 October 1997(20), Erste has been the lead institution in the savings bank grouping, which consists of some 70 savings banks(21), and the second-largest banking group in Austria. The market share of the savings bank grouping together with Erste comes to approximately 30 %(22). The grouping has some 1500 branches in Austria and employs around 24000 people;

c) Raiffeisen Zentralbank Österreich AG (hereinafter called RZB)

RZB is the lead institution of the Austrian agricultural credit cooperative grouping. This is three-tiered in structure(23) and has over 2350 branches. The agricultural credit cooperative grouping has a market share of approximately 22 % and employs about 20000 people. Besides its function as representative of the agricultural credit cooperative grouping, RZB engages in banking business itself, focusing on foreign business and looking after large customers(24);

d) Bank für Arbeit und Wirtschaft Aktiengesellschaft (hereinafter called BAWAG)

Since December 2000 BAWAG has been the principal shareholder in Österreichische Postsparkasse Aktiengesellschaft (PSK)(25). As a result of the extensive...