The ECJ is Not Banking on Credit Institutions (Banco BPN Case): Information Exchanges Between Competitors May Constitute a Restriction of Competition by Object

In the case of Banco BPN/BIC and others (No C-298/22), the ECJ ruled for the first time in its judgment of 29 July 2024 that a “standalone” exchange of sensitive information between credit institutions may amount to a restriction of competition by object. This article will assess the circumstances under which such exchange of sensitive information between competitors may constitute a restriction by object.

In September 2019, the Autoridade da Concorrência (the Portuguese Competition Authority or the AdC) imposed a EUR225 million fine on 14 credit institutions for infringing competition law through the exchange of sensitive information. According to the AdC, those credit institutions participated in a monthly exchange of confidential information related to home loans, consumer credit and corporate lending for more than ten years, from 2002 to 2013. Two types of information were exchanged:

The AdC considered that the exchange of information was a “standalone” practice (not associated with another practice restricting competition such as a cartel), which can be considered as a by-object restriction. In other words, it deemed the restriction to be so serious that it was necessary to examine the potential effects of such practice on the market to consider whether there was a violation of competition law.

Most of the banks brought an action against the decision of the AdC before the Portuguese Competition Court. They claimed that the information exchange at stake was not sufficiently harmful to competition to be characterised as a by-object infringement, and that the effects of such practice should be assessed.

The Portuguese Competition Court decided to refer that matter to the ECJ, to determine the delineation between a restriction by object and by effect when exchanging information between competitors. In a nutshell, the ECJ asked whether a “standalone” exchange of information can be considered as a restriction by object and, if so, under which conditions.

The ECJ only answers the first question and rules that an exchange of information between competitors can constitute a restriction by object. To that end, in terms of content, the information exchange must constitute a form of co-ordination between competitors that is, by its very nature, necessarily harmful to the proper functioning of normal competition, in the context of that exchange.

In that respect, the ECJ states that, in order for a market to operate under normal conditions, each competitor must, on the one hand, determine its policy independently and, on the other, be uncertain at least as to the timing, extent and details of any future changes in the conduct of its competitors on the market. As a result, an exchange of information can be classified as a restriction by-object when the exchange makes it possible to remove such uncertainty.

To that end, it is sufficient that the information exchanged is confidential (ie, not already known by any economic operator active on the market) and strategic (ie, information that, once combined with other information already known to the participants, may reveal, in some circumstances, the strategy that some participants in the information exchange intend to implement regarding one or more parameters on the basis of which competition on the market is established).

The ECJ points out that any exchange of information relating to future prices, or some of the factors determining those prices, is inherently anti-competitive, notably in view of the risk of harm to competition deriving from it, and that the exchange of information relating to current or past events (and not to future intentions) must still be regarded as strategic if a participant in the exchange may infer with sufficient precision the future conduct of the other participants in that exchange or their reactions to a possible strategic move on the market, notably because of the nature of the goods or services in question, the actual conditions in which the market functions, the cost structure or the production and management methods of the participants.

In view of all this, the ECJ notes that a comprehensive and reciprocal monthly exchange of information between competing credit institutions relating to the conditions applicable to transactions that took place in high concentrated markets with barriers to entry must be classified as a restriction of competition by-object insofar as the exchange concerned the future intention of participants to alter one or more parameters on the basis of which competition is established on the markets (eg, to alter credit spreads in the future, which constitute one parameter of the competition on the markets concerned).

Ultimately, it is for the Portuguese Competition Court to determine whether the exchange of information in question qualifies as a restriction by object.