In six judgments dated June 30 to July 1, 2021,[1] the Lazio Regional Administrative Court (the “TAR Lazio”) set aside an infringement decision issued by the Italian Competition Authority (“ICA”) against eleven Italian banks[2] and the Italian Banking Association (the “ABI”). The ICA decision concerned an alleged anticompetitive agreement aimed at coordinating business strategies in order to determine the remuneration model for the Sepa Compliant Electronic Database Alignment (“SEDA”) service.[3]
Background
The ICA decision
On April 28, 2017, following the investigation carried out in case I794, the ICA found that the ABI and eleven banks (together with the ABI, the “Parties”) had put in place a single agreement aimed at coordinating their commercial strategies in relation to the remuneration model for the SEDA service.
The SEDA service was set up in the context of the Single European Payments Area (“SEPA”), which progressively replaced, in Italy, the previous direct debit system for bills, called RID, with the SEPA Direct Debt (“SEPA DD”) service. The system allows consumers to pay periodic charges (for example for household bills) directly through a withdrawal from their bank account.
Currently the system includes the actual payment (the SEPA DD service) and an information service addressed to, and paid for, by billers (the SEDA service). In particular, the purpose of the SEDA service is to exchange the mandate-related information between the bank of the creditor and the bank of the debtor prior to the first debit collection, thus ensuring the same information fields previously included in the RID payment service, but not in the SEPA DD.
However, while the RID system provided for a single commission to be paid by the creditor, the SEPA service provides for three: (i) a so-called “collection fee”, which remunerates exclusively the SEPA DD service and is paid to the payment service provider (“PSP”) of the beneficiary; (ii) a SEDA service’s subscription fee, which is paid to the PSP of the payer; and (iii) a fee remunerating the alignment services included in the SEDA and paid to the PSP of the beneficiary.
According to the ICA, the parties entered into a restrictive agreement having as its object the definition of a system of remuneration for the SEDA service, aimed at increasing the price of such service. In particular, according to the ICA, the Parties agreed that:
- the price of the SEDA would be defined freely by each bank and set, in its maximum value, through publication on the SEPA website;
- in the absence of a specific negotiation, the beneficiary would pay the maximum fee to the debtor’s bank directly, through the adoption of a so-called “1 to many” mechanism;
- they would coordinate the methods of application of the SEDA commission fees to the old RID mandates before the entry into force of the SEPA.
Also taking into account that, as a result of ABI Circular No. 14/2013, this model was transformed into an interbank agreement, to which more than 500 members of the ABI were party, the ICA held that the agreement had had a broad impact on the market, by leading to a general increase in prices.
However, taking into the circumstances of the case at hand, the ICA decided not to impose financial penalties, given the non-seriousness of the infringement, also in light of the regulatory and economic context in which the conduct took place, as well as of the fact that, during the proceedings, the parties had proposed a new system of remuneration capable of reducing the overall cost of the SEDA service, to the benefit of firms using it and, ultimately, final customers.
The TAR Lazio judgments
In June and July 2021, the TAR Lazio upheld the appeals brought by the Parties and annulled the ICA decision.
First, the Parties – except BNL, which did not raise this issue – successfully challenged the ICA’s delay in initiating proceedings. The ICA opened the proceedings on January 21, 2016, but the Parties proved that it was aware of the conduct since the end of 2012.
The TAR Lazio held that, although the 90-day term provided for by Article 14 of Law No. 689 of November 24, 1981, does not directly apply to the duration of the preliminary investigation phase, this phase cannot be extended for an indefinite period of time. The ICA must commence proceedings within a reasonable timeframe (i.e., a period not exceeding some months) from the complaints filed with it, also in light of the due process right protected by Article 6 of the European Convention on Human Rights and the right to good administration established by Article 41 of the EU Charter of Fundamental Rights. The starting date to calculate such timeframe coincides with the acquisition of full knowledge of the alleged anticompetitive conduct.
Having noted that the ICA was aware of all the details of the conduct in December 2013, the TAR Lazio concluded that the ICA’s decision to start the investigation two years later was contrary to the principles of good management and efficiency of administrative action.
Second, the Parties successfully challenged the ICA’s conclusion that they had intended to alter the competitive dynamics for the setting of remuneration prices for the SEDA service, with a view to keeping prices artificially high. In this respect, the TAR Lazio held that, in light of available evidence in the file of the proceedings, it was clear that the Parties’ intention was to identify an appropriate remuneration mechanism for the new service, in order to ensure the remuneration allowed the PSP of the payer to apply a profitable consideration, while remaining autonomously decided by each service provider, in compliance with antitrust rules.
In light of the above, the TAR Lazio annulled the ICA Decision.
[1] TAR Lazio Judgment Nos. 7708, 7709, 7710, 7713 and 7714 of June 30, 2021, and No. 7795 of July 1, 2021.
[2] Banca del Piemonte S.p.a., Banca Monte dei Paschi di Siena S.p.A., Banca Nazionale del Lavoro S.p.A. (“BNL”), Cassa di risparmio di Parma e Piacenza S.p.A., Banca Piccolo Credito Valtellinese S.p.A., Istituto Centrale delle Banche Popolari Italiane S.p.A., ICCREA Banca, Intesa SanPaolo S.p.A., Banca Sella S.p.A., UBI Banca S.p.A., Unicredit S.p.A.
[3] ICA Decision No. 26565 of April 28, 2017, Case I794, ABI/SEDA.