The European Commission has reported that major competition barriers exist within the retail banking sector and in the markets for payment cards and payment systems, following the publication of the final report of its competition inquiry into the retail banking sector.
EU competition commissioner Neelie Kroes said: The inquiry has found widespread competition barriers which unnecessarily raise the cost of retail banking services for European firms and consumers. The commission will make full use of its powers under competition law to tackle these barriers, in the market for payment cards and elsewhere when they result from anticompetitive behavior.
In the payment cards industry, the European Commission found several concerns, including highly concentrated markets in many member states, specifically for payment card acquiring, which could cause banks to restrict new entry and charge high card fees. In addition, it discovered that banks reporting high and sustained profitability suggests that banks in some member states enjoy significant market power and could impose high card fees on firms and consumers.
In the retail banking product market, the commission noted that this sector was generally fragmented. It indicated concern in some aspects of co-operation among banks, which, in turn, could reduce competition and deter market entry, as well as concern over the inconvenience of changing current accounts.
As a result of the publication, the commission hopes to boost retail banking to benefit the creation of the Single Euro Payment Area.