Today, the European Court of Justice handed down its judgment on a reference for a preliminary ruling from a Portuguese court in case C-298/22 Banco BPN Banco BPN, Banco Bilbao Vizcaya Argentaria and others v. Autoridade da Concorrência. In its judgment, the Court confirms that a “standalone” exchange of information between competitors can constitute a restriction of competition “by object.”
In September 2019, the Portuguese Competition Authority (ADC) levied a total fine of 225 million euros on 14 credit institutions, which included the six largest banks in Portugal. The competition authority determined that these institutions had violated both national and EU competition laws by engaging in a monthly exchange of sensitive information for over a decade, specifically from 2002 to 2013. The exchanged information pertained to the markets for home loans, consumer credit, and corporate lending.
The information exchange was deemed “standalone” since the competition authority did not claim it was associated with any coordinated practices that would restrict competition, such as agreements on pricing or market division. However, ADC maintained that this exchange represented a restriction of competition by its very nature. This implies that, in the view of the authority, the seriousness of the coordinated practice was such that an analysis of its potential effects on the relevant markets was unnecessary to determine its violation of competition law.
The ADC’s ruling was challenged in court by the banks, which argued that the information exchange lacked the necessary harmful characteristics to be deemed a restriction of competition by object. They maintained that an evaluation of the effects was required and that the ADC should have factored in the economic, legal, and regulatory context related to the exchange.
The Competition, Regulation, and Supervision Court (TCRS) decided to seek clarification from the Court of Justice regarding the conditions and criteria that would classify an exchange of information as a restriction of competition by object.
In its judgment, the European Court stated that “a comprehensive and reciprocal monthly exchange of information between competing credit institutions, which took place in markets where concentration is high and there are barriers to entry, relating to the conditions applicable to transactions carried out on those markets, in particular current and future credit spreads and risk variables, and individual production figures of the participants in that exchange, in so far as, at the very least, the spreads thus exchanged are those which those institutions intend to apply in the future, must be classified as a restriction of competition by object.”
The Court of Justice seems to have utilized this ruling to shed light on the progression of its recent case law, transitioning from a broad and formalistic understanding of the concept of restriction by object to a more focused and pragmatic interpretation. For years, the Court has sought to confine the notion of “restriction of competition by object” to actions that evidently harm competition. This ruling signifies a pivotal change, asserting that an independent exchange of information may be regarded as a restriction by object in its own right, irrespective of its association with a wider anti-competitive practice or the absence of demonstrated market impact.
The TCRS is expected to endorse the ADC’s view on the classification of the infringement. This is important as the consumer organization Ius Omnibus is currently pursuing five class action lawsuits in the TCRS against the banks, seeking to obtain compensation for consumers in Portugal. The total damages attributed to the banking cartel are estimated to surpass 5.5 billion euros.
More information about the case is available at https://theconsumerclaim.com/
