Tribunal decides on individual exemptions from new law

Edurne Navarro.

11/10/2007 International Law Office

The Tribunal for the Defence of Competition issued several decisions on individual exemptions just before the new Law for the Defence of Competition (which eliminates individual exemptions) entered into force on September 1 2007. The cases concerned an information-sharing agreement in the beer sector and interchange fees for automated teller machine (ATM) transactions. Duration of the exemptions differed significantly.

Information-Sharing Agreement

On July 11 2007 (1) the tribunal granted an individual exemption for a five-year period to an information-sharing agreement concluded by the Spanish Beer Producers Association (ACE), subject to several conditions on the availability, frequency and type of information exchanged. It concluded that the beer market is dominated by three large producers (with a joint market share of 90% - all members of ACE), with very specific regional preferences and high barriers to entry. In this respect, it considered that the information-exchange agreement could increase the risk of collusion in the market and raise barriers to entry due to information asymmetries of new entrants.

Nevertheless, the tribunal considered that a limited exchange of information under certain conditions could reduce costs and benefit consumers, and granted an individual exemption for a five-year period subject to the following conditions:

  • The information should be submitted to a notary who will aggregate it in order to prevent the identification of each company's individual data. The information should be made available to the public at the same time as to members of the association;


  • Certain information, such as sales of classic versus non-classic brands, should not be exchanged since it constitutes sensitive business information; and


  • The exchange of other information is permitted, although the tribunal has restricted the frequency of exchange depending on the information shared. Information on market volume sales may be exchanged on an annual basis, classified by:


    • container (barrel, reusable and one-way bottles, and cans);


    • type of beer (alcoholic or non-alcoholic);


    • distribution channel (Horeca (2) or home consumption);


    • beer segment (national, international and specialties); and


    • geographical areas.

Information on total sales volumes may be exchanged on a quarterly basis. Previously, the tribunal had considered that a six-month delay for an exchange of information was necessary.

Interchange Fees for ATM Transactions

On August 2 and 3 2007 the tribunal issued three decisions in relation to applications filed by two card payment networks for the individual exemption of certain agreements on multilateral interchange fees for ATM transactions.

According to the tribunal, agreements establishing multilateral interchange fees for transactions using ATMs - which constitute a separate market from other means of payment - are restrictive of competition because they constitute agreements between competitors in relation to the main competition criterion: price. However, insofar as they allow banks to provide clients with a wider network of ATMs without the need to make large investments, they improve the commercialization of services and generate transaction cost savings for end users. In addition, as the sharing of networks generates certain costs, the tribunal accepts that some sort of tariff or commission has to be paid.

However, in order to exempt such agreements, the tribunal must establish that the criteria for exemption foreseen in the competition law (which are identical to those in Article 81.3 of the EC Treaty) are fulfilled. This will be the case provided that two conditions are met.

Firstly, it must be shown that the multilateral interchange fee is the most efficient method to recoup the cost of providing ATM services and its rate does not lessen competition between banks in connection with the collection of bank deposits. In particular, the efficiencies arising from the use of interchange fees must be superior to those associated with a surcharge model (ie, multilateral interchange fees versus imposition on cardholders of commissions by the issuer and surcharges by the owner of the ATM).

Secondly, the interchange fee must be based on the effective costs incurred for the service provision, which must also be evidenced. Furthermore, the tribunal questioned whether a cost-based approach is adequate to calculate the interchange fee. In the past, multilateral interchange fees seemed to be lower than costs. Therefore, the tribunal indicated that a calculation of multilateral interchange fees on an alternative basis should be explored.

Applying these criteria to the agreements, the tribunal concluded that only an in-depth economic analysis of the advantages of each model would allow for a conclusive assessment of the system of multilateral interchange fees for ATM transactions from a competition perspective. Therefore, the tribunal limited itself to: (i) authorizing the agreements until the new Competition Law entered into force (September 1 2007); and (ii) rejecting the levels of interchange fees agreed to the extent that they exceed those previously applied.

These decisions highlight the different approaches followed by the tribunal during the period within which individual authorizations were granted prior to the entry into force of the new law, which has eliminated the individual exemption system and replaced it with a self-assessment system similar to that contained in EU Regulation 1/2003. Moreover, the decisions take into account the proceedings pending before the European Commission in relation to Mastercard's interchange fees (in which the commission has suggested that interchange fees may not be indispensable to the provision of card services). In such scenarios, the tribunal preferred not to adopt a final decision on the method to be followed by banks for recouping the costs associated with the provision of ATM services to cardholders.


(1) Decision A-360/06 'Estadística Cerveceros 2'.

(2) Hotel/Restaurant/Cafeteria.

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