Competition Court considers 12 banks failed to ‘show sense of judgement’; penalised consumers
Today was the day that 12 banks operating in Portugal were hoping that the Competition Court would throw out fines of €225 million levied against them for acting as a cartel.
But that didn’t happen.
The Competition Court today upheld the fines imposed years ago by the Competition Authority – and considered that the banks “had not shown a sense of judgement towards the conduct that harmed consumers”.
“The offence is very serious, since the defendants reduced competition (in the credit market) through a concerted practice,’ said judge Mariana Gomes Machado, reading the summary of the judgement in the case known as the “banking cartel”.
The court ordered Caixa Geral de Depósitos (CGD) to pay €82 million, Banco Comercial Português (BCP) €60 million, Santander Totta €35.65 million, BPI €30 million, Montepio €13 million, BBVA €2.5 million, BES €700,000, Banco BIC (for acts carried out by BPN) €500,000, Caixa Central de Crédito Agrícola €350,000 and União de Créditos Imobiliarios €150,000.
Barclays, which denounced the practice – and presented a request for leniency – was spared of a fine and “only admonished”, writes Lusa.
The judge said that the court’s main concern was that the practice of price fixing between banks should not be repeated. It was also concerned that, at the trial – with the exception of Barclays – none of the banks had shown any sense of criticism or any effective remedial behaviour.
“The judge considered that there was a ‘homogeneous degree in the behaviour’ of the banks in this collusion and that the extent of concerted practices was explicit in the example that CGD received information from Montepio into which it added its data and sent it to BPI”.
At the time that the Competitions Authority issued the fines – way back before even the start of the pandemic – 14 banks were ‘in the frame’.
The fines followed an ‘exhaustive investigation’ spanning more than a decade (2002 – 2013).
Basically, banks exchanged sensitive information on the supply of retail banking credit products, including mortgages, consumer and corporate loans.
Each bank knew in detail “the characteristics of the offer of other banks, which discouraged the target banks from offering better conditions to customers by eliminating competitive pressure”.
The competitions authority said the scheme had a significant impact on customers (none of which would have been any the wiser).
“By distorting the rules of competition through unlawful coordination that allowed them (banks) to reduce the risk and uncertainty about the performance of their direct competitors, the behaviour of the banks harmed competition, directly affecting consumers,” said the authority.
Not surprisingly, left wingers seized on this scandal to rail against the “criminal and abusive practices” sanctioned in Portugal.
In 2020, when Left Bloc coordinator Mariana Mortágua was letting rip, she said the Bank of Portugal – far from managing to identify these abusive practices – had called for the record fines to be reduced ‘in the interests of the banks’ profitability’.
That was a good long time ago: there is now a new ‘man at the top’ of the country’s central bank, thus it remains to be seen what happens next.
Considering however that this is a ruling about a ruling about a practice that began over 20 years ago, it is perhaps not advisable to hold one’s breath.
UPDATE: After this text went up online, Lusa reported that the “banks will appeal the judgement” – attempting to plead, among other arguments, the statute of limitations for liability…
