Toespraak Kroes (eurocommissaris mededinging) over recente boetes aan Visa, Sony, en asfaltkartel (en)

SPEECH/07/591

Neelie Kroes

European Commissioner for Competition Policy

Introductory remarks on Spanish bitumen cartel, Visa/Morgan Stanley and Sony/BMG joint venture

Press conference

Brussels, 3rd October 2007

Ladies and gentlemen

The Commission has taken three competition decisions today which I would like to present to you.

First, the Commission adopted a decision that Visa International and Visa Europe have seriously violated EC Treaty and EEA Agreement rules on restrictive business practices and has imposed a fine of 10.2 million euros.

This is because from March 2000 to September 2006, Visa refused to admit Morgan Stanley Bank International Limited of the UK as a member of the Visa network without an objective justification. The problem the Commission found was that Visa had applied its rules on excluding competitors from its network in an unjustified and discriminatory manner.

Unjustified because Morgan Stanley was not a competitor in Europe. Morgan Stanley did not have a payment card network in the EU and it was not a potential market entrant, given the high entry barriers to launching a payment cards network.

And discriminatory because Visa had previously admitted as members of their network other card network operators, such as Citigroup (the owner of the Diners' Club network) and the shareholders of the JCB card.

The Commission found that the exclusion of Morgan Stanley from Visa membership restricted competition in the provision of credit card acceptance services, known as "merchant acquiring", to retailers in the United Kingdom. This is because retailers expect banks to offer card acceptance contracts as a package including both Visa and MasterCard.

Therefore Visa's refusal to admit Morgan Stanley as a member not only prevented Morgan Stanley from providing services to retailers as regards Visa transactions (which represent about 60% of the market), but also as regards other payment cards transactions. Morgan Stanley had concrete plans and expertise to contribute to more efficient competition and generate positive effects on prices and the quality of service in a highly concentrated market.

The provision of credit card acceptance services to merchants is an economically significant activity that remains compartmentalised along national borders within the EU. It is, unfortunately, characterised by limited competition, as highlighted by the Commission's competition inquiry into the retail banking sector.

In the case of the UK, the market is in the hands of a few players and new entrants in the acquiring market - particularly those with a pan-European potential like Morgan Stanley - are scarce. Morgan Stanley had concrete plans and expertise to contribute to more efficient competition and generate positive effects on prices and the quality of service. However, Visa's behaviour prevented the competition that Morgan Stanley could have helped bring about.

Visa's action reduced choice for UK retailers, who were denied potential access to alternative suppliers of credit card acceptance services.

The payment cards industry plays a key role in the creation and functioning of the Single Market for payments. This decision sends a clear signal that the Commission will not hesitate to take action to ensure that consumers do not suffer from anticompetitive behaviour in the area of payment cards and will intervene if companies are illegally refused membership of payment card networks.

The second Decision I want to mention is the Commission's condemnation of a cartel on the Spanish bitumen market that lasted almost 12 years, from 1991 to 2002, and the imposition of a fine of 183 million euros. As a result of this cartel, bitumen suppliers in Spain cheated customers, public authorities and tax payers by carving up the market for road-building bitumen amongst themselves.

I would like to underline once again that the Commission will not tolerate such illegal activity by companies to swindle their clients and we will continue to impose stiff penalties on offenders.

Bitumen is used for the production of asphalt in road construction. The cartel involved both price coordination and market sharing, through the setting of market quotas and subsequent volume and customer allocation.

The investigation concerned five undertakings active on the Spanish market: Repsol (of Spain), Cepsa (also of Spain), BP (of the UK), Nynäs (of Sweden) and Galp (of Portugal). The value of the Spanish bitumen market amounted to some €286 million in 2001.

The undertakings investigated met every year to share the market amongst themselves for the following year. They discussed specific market shares for each company and bitumen prices around a so-called "asphalt table", where they met bilaterally or multilaterally. The parties met at hotels or at companies' premises.

The investigation began following an immunity application filed by BP in 2002 under the Leniency Notice. BP therefore escaped any fine. Repsol and Cepsa filed a request for a reduction of fines under the Leniency Notice and were granted a reduction in their fines of 40% and 25% respectively.

Finally I want to mention today's decision to clear the Sony/BMG joint venture. As you may remember, the Commission's first clearance decision - in 2004 - was annulled by the Court of First Instance last year. Today's decision re-examines the case from top to bottom, looking not only at what we think likely to happen on the markets, but what has actually happened on the marketplace from 2004 to today.

We have conducted an extraordinarily detailed analysis, looking at millions of individual pieces of data, and building up as complete a picture as we possibly could as to the workings of these markets. We concluded that this merger was not a threat to competition, and have therefore cleared it without conditions.

In its investigation, the Commission looked in detail at the arguments raised by third parties, and the points made by the Court. It analysed all retail net prices, discounts and wholesale prices for all CD chart albums sold by all major record companies to all of their customers in the European Economic Area between 2002 and 2006. This was an enormous exercise. We found no evidence to support any theory of actual or likely anti-competitive effects of this merger.

In addition, we looked hard at the market for the licensing of recorded music in digital format, which was only beginning to develop at the time of the Commission's 2004 investigation. This has now been fully analysed in the light of its development since 2004, and again we found no problems.

The Commission investigated all the various theories of price and non-price related coordination between major record companies provided by third parties and market observers. These theories included alleged coordination on budgets, on the pricing of each title, on pricing policy, on chart album prices, on access to retailers, on access to airplay, on chart rules, on release date, on coordination at the level of publishing activities. Again, we found no evidence of harmful effects.

This has been a long and very thorough investigation. I am confident in the conclusion reached: this merger poses no competition problems.