The agreement between the bank card companies and the commercial banks struck in 1996 led to a unified charge retailers paid on bank card use, the GVH said in a statement. "This commission rate is one of the most important factors of competition among the banks providing point-of-sale bank card terminals," the GVH added.
Visa and MasterCard were fined HUF477 million each, (about $2.6 million) and the banks are to pay a HUF954-million fine in total.
The seven banks fined are:
- OTP Bank Nyrt.(OTP.BU), Hungary's biggest bank by market share
- Budapest Bank Zrt., owned by GE Money Bank, part of General Electric (GE)
- MKB Bank Zrt., majority owned by Germany's Bayerische Landesbank AG
- CIB Bank Zrt., owned by Italy's Sanpaolo Intesa (IMI
- Erste Bank Zrt., the local arm of Austria's Erste Bank AG (EBS.VI)
- K&H Bank Zrt., part of Belgium's KBC Group NV (KBC.BT)
- ING Bank Zrt., the local unit of Netherlands-based ING Bank NV.
"We concluded that the financial institutions under investigation, by creating a uniform interchange-fee structure, ... and by maintaining and supporting such a free structure, inhibited competition," Toth said. "Therefore competition between the two card firms and the card-accepting banks was distorted and limited," Toth said.
GHV imposed a total fine of HUF 968 m on seven banks as follows:
Budapest Bank , a unit of General Electric via GE Money Bank, HUF 188 m, OTP Bank , the country's largest lender, HUF 281 m, MKB B ank, majority owned by Germany's Bayerische Landesbank AG, HUF 84 m, CIB Bank , a unit of Italy's Intesa Sanpaolo, HUF 91 m, Erste Bank HUF 107 m, K&H Bank , a subsidiary of Belgium's KBC, HUF 127 m and ING Bank HUF 90 m.
The competition authority distributed fines based on the interchange fees received by the banks between 2004 and 2007 and also their market share in 1996 and presently.
Authority's Web site: www.gvh.hu
The responsibilities of the Authority
The Hungarian Competition Authority (Gazdasági Versenyhivatal - GVH; its English name used in the early years of operation was Office of Economic Competition) was established by Act LXXXVI of 1990 on the prohibition of unfair market practices, and started its operation on 1 January 1991. The enactment of the prohibition of anticompetitive behaviour and the setting up of the authority was motivated by the will of protecting the freedom and fairness of competition.
The Competition Act, which is currently in force, is Act LVII of 1996 on the prohibition of unfair and restrictive market practices. The Act entered into force on 1 January 1997. Besides the provisions on competition, the Act determines the legal status of the Authority and regulates its basic structure and operation, further, the procedures, which it conducts. By Hungary's accession to the European Union, the GVH became a member of the European Competition Network that consists of the national competition authorities of the EU Member States and the DG Competition of the European Commission. As from the same time, the GVH is required to apply EC competition law under certain conditions.
The task of the GVH in relation to the fairness and freedom of competition is to enforce the competition rules for the benefit of the public in a way, which increases long-term consumer welfare and competitiveness at the same time. Furthermore, it promotes competition in general and, where no competition exists on the market, the GVH endeavours to create competition and promotes appropriate state regulation to be put in place.
The activities of the GVH in connection with the safeguarding of competition rest on the following three pillars. 1) competition supervision proceedings - the enforcement of the national and the Community competition law; 2) competition advocacy - the GVH tries to influence state decisions; 3) competition culture - the objective of the GVH is to contribute to the development of competition culture by the dissemination of knowledge about competition policy, in order to raise public awareness of competition issues, and by the promotion of the development of competition-related legal and economic activities of public interest.
Beyond the safeguarding of competition, the GVH fulfils other law enforcement tasks provided by other legal acts such as the Trade Act.
