On November 30, 2022, the Italian Competition Authority (the “ICA”) closed the proceedings initiated on December 1, 2020 against Bancomat S.p.A. (“Bancomat”). Bancomat is an Italian company that operates the Bancomat and PagoBancomat circuits, which can be used to make withdrawals at Automated Teller Machines (“ATMs”) as well as cashless payments through so-called Points of Sale. In its decision, the ICA found that Bancomat’s proposed new remuneration model for circular withdrawal (the “Proposal”), brought to attention of the ICA by Bancomat itself on October 22, 2022, infringed Article 101 of the Treaty on the Functioning of the European Union (the “TFEU”).
The proceedings concerned the services for cash withdrawal from the Bancomat circuit (the “Circuit”) through ATMs owned by a bank other than the one at which the cardholder has his or her current account (so-called circular withdrawal).
The currently applicable rules for circular withdrawals establish a remuneration system that provides for the payment of an interchange fee (Multilateral Interchange Fee, “MIF”) by the cardholder’s bank to the bank that owns the ATM, the fixed amount of which is determined by the Circuit. The payment of the MIF is followed by the payment of a fee by the cardholder to his or her bank (the so-called withdrawal fee), the amount of which is determined by the bank of the cardholder. For a circular withdrawal to take place, the bank that owns the ATM advances the cash to the cardholder and performs certain preparatory activities (such as, for example, verifying the availability of the amount in the cardholder’s bank account). The amount withdrawn is then returned by the bank of the cardholder along with the payment of the MIF, aimed at remunerating the service rendered.
Alongside this model, currently in force in Italy, there is an alternative remuneration model based on the Direct Access Fee (“DAF”), under which the bank that owns the ATM charges a fee directly to the cardholder, regardless of the type of contract with his or her own bank
Bancomat proposed to change the current model of remuneration for circular withdrawals. Its proposal consisted of eliminating (i) the MIF, and (ii) the prohibition on ATM-owning banks charging a DAF directly to the cardholder at the time of withdrawal. In doing so, the ATM-owning bank would no longer be remunerated by the bank of the cardholder, but by the cardholder, who would pay the fee directly to the ATM-owning bank, instead of his or her own bank. The amount of the fee would be shown to customers at the ATM only at the time of authorization of the withdrawal transaction.
According to Bancomat, the proposed change was justified by the increased costs incurred by banks in the management of ATMs, related to the technological evolution of the equipment and the increased risks associated with more sophisticated fraudulent initiatives. According to Bancomat, those costs may in fact be even higher than the amount of the interchange fee. In Bancomat’s view, moreover, the Proposal was likely to produce efficiencies that would actually benefit both competition and consumers. In particular, the Proposal would ensure that a sufficiently widespread network was maintained to serve customers, thus allowing them to continue to have widespread access to cash.
The findings of the ICA
The ICA had several concerns in relation to the Proposal, insofar as the Proposal envisaged rules for the members of the Circuit that would likely alter competitive dynamics, with possible negative effects on both the demand and supply sides.
In particular, according to the ICA, the Proposal could lead to:
- a significant increase in average circular withdrawal fees for customers;
- an obstacle to competition among banks in the provision of services to customers, since the banks would be deprived of a competitive tool (i.e., the ability to determine the circular withdrawal fee);
- an increase in incentives for collusion between the banks belonging to the Circuit, as price homogeneity at national level would prevent the diversification of the price structure, which by its nature is an obstacle to collusive equilibrium.
The ICA expressed concerns especially with reference to the fact that, by changing the current model, in which the MIF is limited to the relationship between banks (as an intermediate cost), the Proposal would allow the ATM-owning banks to directly charge a price to customers, who may not have the possibility to withdraw elsewhere, at least in some situations.
In addition, the Proposal envisaged the setting of an “extremely high” cap for the withdrawal fee (€1.50), thus potentially distorting competitive dynamics among banks, which could have the incentive to set the circular withdrawal fee at or near the cap amount to maximize their revenues.
Moreover, the ICA had concerns as to the possible impact of the envisaged system on minor competitors. Small to medium-sized banks usually offer the circular withdrawal service without charging a direct fee or with economically advantageous terms to attract new customers. Under the Proposal, these banks could be deprived of such competitive leverage, and could lose some of their customers, who might decide to move their current accounts to the banks owning major ATM networks, in order not to pay the fees imposed by these banks.
Based on the above considerations, the ICA held that the Proposal constituted a restrictive agreement under Article 101(1) TFEU. Furthermore, according to the ICA, the agreement could not benefit from an individual exemption under Article 101(3) TFEU, as Bancomat had allegedly failed to provide sufficient evidence that the four requirements laid down in this provision were met. In particular, with regard to the requirement that consumers should be allowed a fair share of the benefits resulting from the agreement, Bancomat claimed that the cost of a single withdrawal would decrease, as more than 50% of consumers currently pay amounts higher than the cap for the withdrawal fee provided for in the Proposal. However, the ICA found some inconsistencies in certain figures provided by Bancomat during the investigation, and estimated that, if the Proposal were implemented, up to 70% of the circular withdrawals could have become more expensive, also in light of the significant difference between the average cost of withdrawal incurred by banks (€0.80) and the cap for the withdrawal fee (€1.50). Furthermore, according to the ICA, consumers would not benefit from the Proposal in terms of transparency either, as they would be shown the amount of the withdrawal fee only at the time of withdrawal at the ATM. In light of the above, the ICA ordered Bancomat to refrain from engaging in future conduct similar to that described in the Proposal.
 Decision No. 30381 of November 30, 2022, I849 – Bancomat-prelievi contanti.