The Association of Local Banks in Denmark, Savings Banks and Cooperative Banks in Denmark and its illegal dictation of its members' behavior

The Council Meeting 30 January 2008

On January 30th 2008 the Danish Competition Council decided that the Association of Local Banks in Denmark, Savings Banks and Cooperative Banks in Denmark (hereinafter the Association of Local Banks in Denmark) up until December 18 2008 has violated the Competition Act by entering into an illegal agreement with its members by adopting an article in their regulations stating that members could be excluded for lack of collegiate behavior by protesting against members' competitive behavior in specific cases and in general by calling upon its members to restrain from competitive behavior.

The case initiated in April 2007 when the Danish Competition Authority carried out a dawn raid at the Association of Local Banks in Denmark.

On the basis of the material collected at the dawn raid, the Competition Council judged that the Association of Local Banks in Denmark’s article on exclusion from the association on the basis of lack of collegiate behavior and its conduct towards its members was illegal according to section 6 in the Competition Act. The infringements consist of three parts.

Firstly, the association and its members have entered into an illegal agreement by adopting the article on exclusion on the basis of lack of collegiate behavior. The objective of the agreement was to make members of the association abstain from anti collegiate behavior including competitive behavior. If a member failed to comply with this it could be excluded from the association.

Secondly, the Association of Local Banks in Denmark has protested against 3 members’ competitive behavior in relation to their strategy on the marketing of new employees from other member banks and marketing on no service charges and high interests on specific accounts.

Thirdly, the Association of Local Banks have called upon all its members to abstain from competitive behavior in the form of headhunting other members' employees, and for marketing strategies that could imply that members needed not to make profits.

The relevant market is defined as the retail banking market geographically defined as Denmark. The Association of Local Banks has a total market share of some 20 percent in Denmark depending on which measures being used. The Competition Council found that the competition restriction was appreciable.

The Association of Local Banks has on 18 December 2007, following the receipt of the Competition Council’s memorandum on the association’s illegal behavior, at an extraordinary general meeting removed the article on lack of collegiate behavior and told its members that it no more will exercise its anticompetitive behavior.

The Competition Council has judged the Association of Local Banks for its anticompetitive behavior up until 18 December 2007.