Background
On 25 September 2023, the Belgian Competition Authority (BCA) concluded a preliminary investigation into the Belgian banking sector’s alleged “gentlemen’s agreement” not to compete with the State treasury bond.
To tackle low interest rates, the Belgian government had decided to issue a special State treasury bond for consumers at the end of August 2023. The government also lowered the applicable taxes to the pay-out of this bond, to increase its attractiveness. The bonds were issued by the Federal Debt Agency, but consumers could also subscribe via their banks.
It goes without saying that this created significant upheaval in the Belgian banking sector, with daily interviews and press statements as a result. During those interviews, two banks mentioned that banks had made a “gentlemen’s agreement” not to compete with the bond via other financial products, and not to increase the rates of return on savings accounts during the subscription period.
Quickly thereafter, the banks in question denied the information, citing communication errors. The Federation of the Belgian Financial Sector (Febelfin) also stated that there are “no agreements on commercial policy, and therefore on interest rates, between the banks” and that “this is not permitted under competition law, and is therefore absolutely out of the question”.
The press communications had however already caught the eye of the BCA, who opened an investigation.
Findings of the preliminary investigation
Following a preliminary investigation, the BCA concluded that there had most likely indeed been a communication error and that confusion existed regarding a contract clause in the agreement that all banks individually had to sign with the Federal Debt Agency. According to that clause, banks are barred from releasing or adapting saving certificates (“bonds de caisse”/”kasbons”) during the subscription period of the State treasury bond. This is a fairly standard clause for such agreements.
The BCA considered this a sufficient basis to suspend its investigation, in particular since the situation had already been widely reported in the press and that banks had received a competition law reminder from Febelfin.
Nevertheless, in its press release, the BCA still questions the use of the term “gentlemen’s agreement”, a term uncommon in the banking industry, by the experienced people involved in the communications, as well as the level of approximation in the communication of certain banks.
Signalling via corporate communications
Even though the BCA has suspended its investigation, the Belgian banking sector remains subject to scrutiny. The BCA has in particular been requested by the Minister of Economy and Labour to prepare a report on the functioning and competitiveness of the sector and particularly on signalling between banks via corporate communications. The report is expected by the end of October 2023.
Under competition law, even public announcements may be considered problematic if they are capable of facilitating coordination between companies. Public announcements may indeed provide competitors insight in a company’s business strategies or future market intentions. Public announcements involving such information can therefore become problematic if they go further what is necessary to meet customer’s expectations or regulatory requirements.
The Commission applied these principles in its seminal Container Shipping decision. In that case, the Commission found that container liner shipping companies regularly made public announcements about future price increases. However, the companies were not bound by the announced increases and some of them ultimately postponed or modified the increases, possibly aligning them with those announced by other companies. The Commission in particular considered that the public announcements may have had little value to customers as they did not enable them to plan ahead or compare prices.
Concluding remarks
The saga serves as a reminder for companies that they should be aware that public statements may draw the attention of competition authorities. Likewise, companies should not overlook employees in non-commercial functions, like communications, public relations or marketing teams, for competition law compliance trainings and/or implement procedures necessary to avoid unwanted public statements.
For further information, please contact:
Baptist Vleeshouwers, Bird & Bird
baptist.vleeshouwers@twobirds.com
