On July 29, 2024, the Court of Justice issued its preliminary ruling in case C-298/22 Banco BPN v. BIC Português and others.[1] The Court confirmed that a “standalone” exchange of information between competitors – meaning that the information exchange in question constitutes the examined conduct in itself and is not ancillary to any other conduct – can be deemed a restriction of competition by object under Article 101 TFEU. This ruling is important because it clarifies that information exchange can constitute a restriction by object, even if it is not linked to a wider anti-competitive practice and no actual market impact has been shown.[2]
Background
On September 9, 2019, the Portuguese Competition Authority (“AdC”) fined the 14 largest credit institutions of Portugal, which managed 83% of the national banking assets, a total of €225 million for participating in a standalone exchange of information in violation of Article 101 TFEU. This exchange took place between May 2002 and March 2013, and concerned the markets for home loans, consumer credit, and corporate lending. It involved two types of non-public information: current and future market conditions, such as credit spread charts, and production volumes, including the amount of loans each bank granted in the previous month.
The AdC did not find that the banks engaged in any other anti-competitive practices linked to the exchange of information. However, it determined that this “standalone” exchange of information is a restriction of competition by object, meaning it did not need to investigate its potential effects on the market.[3]
Most of the banks challenged the AdC’s decision in court, arguing that the information exchange was not inherently harmful enough to be considered a restriction of competition by object. They argued that an analysis of its effects was necessary, and that the AdC should have considered the economic, legal, and regulatory context of the exchange.[4] This prompted the Portuguese Competition, Regulation, and Supervision Court (the “referring court”) to ask the Court of Justice two questions regarding the possibility and conditions under which an exchange of information can be considered a restriction of competition by object.[5]
The Court’s Judgment
In its judgment, following the Opinion of Advocate General Rantos,[6] the Court of Justice confirms that a “standalone” exchange of information between competitors can constitute a restriction of competition by object. It is sufficient for this exchange to involve a form of coordination that, by its very nature, is necessarily harmful to the proper functioning of competition.
The notions of “confidential” and “strategic” information
The Court of Justice emphasizes that, for the market to function under normal conditions, competitors must independently determine the policy they intend to follow and remain uncertain about the future behavior of the other operators. Therefore, an exchange of information constitutes a form of coordination that can be considered as a restriction by object when it eliminates such uncertainty. This is the case when the information exchanged is “confidential” and “strategic,” as it can reveal competitors’ future conduct in the relevant markets.[7]
Recalling the definition of those notions, the Court of Justice mentions that “confidential information” covers what is not already known to all active economic operators in the relevant market, and that “strategic information” is that which, when combined with other known information, can reveal competitive strategies that firms intend to implement.[8] On this point, the referring court submitted that the exchanges between the banks involved strategic, non-public information that would have been difficult to access and systematize. Specifically, information was shared in a format which was different from what credit institutions typically provide to consumers. Information was shared in a disaggregated and individualized manner, focusing on intentions to change strategic behavior in the near future or current market conditions.[9]
Types of information exchanged
The Court of Justice notes that three types of information were exchanged. First, there was information about credit rate spreads, which is key to competition in mortgage, consumer, and business credit markets. Any details about future intentions regarding these spreads should be considered strategic.[10] Second, the banks exchanged information on future changes to risk variables, based on individual client risk profiles. The Court observes that, when combined with future rate spread intentions, such information provides insight into the participants’ planned pricing strategies.[11] Third, the banks discussed production volumes. This data, combined with other exchanged or publicly available information, could help banks deduce others’ market strategies.[12]
Following these clarifications, the Court of Justice invited the referring court to assess the facts and to determine whether the exchange in question actually constitutes a restriction by object.
Conclusion and Takeaways
Throughout this ruling, the Court of Justice has seized the opportunity to clarify its recent case law evolution from a broad and formalistic interpretation of the concept of a restriction by object to a narrower, more pragmatic interpretation of that concept. For several years, the Court of Justice aimed to limit the concept of “restriction of competition by object” to behaviors that clearly harm competition.[13] The present ruling marks a shifting point, establishing that an independent exchange of information can be considered a restriction by object on its own, even if it is not part of a broader anti-competitive practice and no actual market impact has been demonstrated.
[1] Banco BPN v. BIC Português and Others (Case C-298/22) EU:C:2024:638.
[2] That evolution began with the Court of Justice’s judgment in Groupement des cartes bancaires v. Commission (Case C‑67/13 P) EU:C:2014:2204, which was subsequently confirmed and refined in a series of judgments, including Maxima Latvija v. Konkurences padome (Case C‑345/14) EU:C:2015:784, Budapest Bank and Others (Case C-228/18) EU:C:2020:265, Generics (UK) and Others (Case C‑307/18) EU:C:2020:52, and Super Bock Bebidas (Case C-211/22) EU:C:2023:529. For further analysis on Budapest Bank and others, see our Antitrust Watch blog, “Budapest Bank: Banking on the Importance of the By effect Assessment,” April 2, 2020, available here (and published in the April 2020 EU Competition Law Newsletter). For Super Bock Bebidas, see our Antitrust Watch blog, “Super Bock: RPM Not Automatically a Restriction of Competition By Object,” July 26, 2023, available here (also published in the July 2023 EU Competition Law Newsletter).
[3] Banco BPN v. BIC Português and Others (Case C-298/22) EU:C:2024:638, paras.8-9. See also Opinion of Advocate General Rantos, EU:C:2023:738, paras. 6-7, and our Antitrust Watch blog, “Banco BPN v. BIC Português and Others: Banks Caught Again In The Two Steps Between By Object And By Effect,” October 5, 2023 available here (and published in the October 2023 EU Competition Law Newsletter).
[4] Banco BPN v. BIC Português and Others (Case C-298/22) EU:C:2024:638, para. 10.
[5] Ibid., para. 21.
[6] Opinion of Advocate General Rantos (Case C-298/22), EU:C:2023:738, Banco BPN v. BIC Português and Others (Case C-298/22) EU:C:2024:638, paras.75-79.
[7] Banco BPN v. BIC Português and Others (Case C-298/22) EU:C:2024:638, paras.52-62.
[8] Ibid., paras. 62-65.
[9] Ibid., paras. 68-69.
[10] Ibid., para. 71.
[11] Ibid., para. 72.
[12] Ibid., para. 73.
[13] See specifically Groupement des cartes bancaires v. Commission (Case C‑67/13 P) EU:C:2014:2204 and Budapest Bank and Others (Case C-228/18) EU:C:2020:265.