An Post - Competition Authority decision involving OTC Bill Payments
Jurisdiction | Ireland |
Court | Competition Authority (Ireland) |
Judgment Date | 03 April 2002 |
Docket Number | Decision No: 595 |
Date | 03 April 2002 |
Decision No: 595
COMPETITION AUTHORITY
Notification No. CA/5/01 – IPSO/An Post (OTC Bill Payments) Decision No: 595
Notification was made on 10 May 2001 of an agreement between Irish Payment Services Organisation Limited (“IPSO”), acting on behalf of Allied Irish Banks plc, The Governor and Company of the Bank of Ireland, National Irish Bank Limited and TSB Bank Limited, on the one hand, and An Post on the other, with a request for a certificate under Section 4(4) of the Competition Act, 1991 or, in the event of a refusal by the Competition Authority to grant a certificate, a licence under Section 4(2). A Statement of Objections was issued on 29 June 2001 to the notifying parties indicating the Authority’s intention to refuse to issue a certificate or grant a licence in respect of the notified arrangement and an oral hearing was held on 20 September 2001, following which Revised Heads of Agreement were submitted by the parties on 5 October 2001.
1 Notification was made on 10 May 2001 of an agreement between Irish Payment Services
Organisation Limited (“IPSO”), acting on behalf of Allied Irish Banks plc, The Governor and
Company of the Bank of Ireland, National Irish Bank Limited and TSB Bank Limited, on the one
hand, and An Post on the other, with a request for a certificate under Section 4(4) of the
Competition Act, 1991 or, in the event of a refusal by the Competition Authority to grant a
certificate, a licence under Section 4(2). A Statement of Objections was issued on 29 June 2001
to the notifying parties indicating the Authority’s intention to refuse to issue a certificate or grant
a licence in respect of the notified arrangement and an oral hearing was held on 20 September
2001, following which Revised Heads of Agreement were submitted by the parties on 5 October
2001.
(a) The Subject of the Notification
2.1 The notification concerned arrangements whereby each of the banks involved would ‘migrate’
over-the-counter (OTC) bill payment services from their respective branches to An Post. This
would involve each such bank, as and from a specified date, ceasing or commencing to cease to
provide OTC bill payment services to their customers, subject to as and from such date An Post
being in a position, through its national post office branch network, to continue to provide
corresponding OTC bill payment services to such customers.
(b) The Parties
3.1 In making the notification, IPSO is acting in a representative capacity, for and on behalf of Allied
Irish Banks plc, The Governor and Company of the Bank of Ireland, National Irish Bank Limited
and TSB Bank Limited, which are all licensed banks in the State.
3.2 An Post is a statutory corporation established pursuant to the Postal and Telecommunications
Services Act, 1983, whose shareholders are the Minister for Finance and the Minister for Public
Enterprise. The principal objectives of An Post, as provided for in the Act, include,inter alia, the
- to provide services by which money may be remitted (whether by means of money
- to provide OTC services for An Post’s own and Government business and, provided
that they are compatible with those services and with An Post’s other principal
objects, for others as An Post thinks fit.
(c) The Product and the Market
4.1 The parties submitted that the market affected by the proposed arrangement is that for all forms
or methods of bill payment services in the State. They also submitted the following breakdown
of estimated market share per type of participant in the bill payment sector, by reference to all
payment methods and to cash/cheques respectively. The data in Figure 1 refers, in the case of
banks, to all of the ‘High Street’ banks, not just to those whom IPSO is representing in this case
(i.e. AIB, Bank of Ireland, National Irish Bank and TSB Bank).
-
(a) Bills - Cash and Cheque: 24m
An Post
39%
Banks
42%
Utilities
19%
-
(b) Bills - All Payment types: 49m
An Post
21%
Banks
69%
Utilities
10%
4.2 OTC bill payments involve “in person” physical presentation of a bill (e.g. utility bills issued by
Eircom, Bord Gais etc.) at a bank branch counter. The bill is paid “over the counter” by the bill
payer, usually by means of cash or a cheque. The presenting bank then arranges for the
corresponding debit and credit to be processed through existing inter-bank payment/clearing
systems. The bill payer may also present certain utility bills for OTC payment at any post office
or, if available, at the offices of the bill-issuing utility (e.g. ESB high street shops). The Authority
has not been advised of the exact proportion of bills paid by cash/cheque that are paid OTC, only
that the parties believe that the majority of bills paid in cash and by cheque are paid OTC.
4.3 The parties claimed that, notwithstanding the historical predominance of cash and cheque
payments, over other forms of payment, in the Irish economy in general, and in regular bill
payment in particular, the number and quality of non-paper based methods of bill payment had
increased significantly in recent times, and now included Direct Debits, Standing Orders, Internet
Bank Payments, Telephone Bank Payments, Credit Cards, Debit Cards (Laser) and Automated
Teller Machines.
4.4 The parties submitted that OTC payments tend to be paper-based transactions, and are more
costly and less efficient to process than electronic bill payment methods. They also submitted the
following data illustrating the difference in cost between such paper-based transactions and
electronic bill payment methods.
(e) Structure of the Market
5.1 The processing of payments in the State is conducted by participating banks and financial
institutions through the auspices of a number of payment systems, each of which is regulated by
the Central Bank, and is constituted as a company. Examples of the latter areIrish Paper Debit
Electronic Payments Clearing Company(IRECC) and Laser. DebitCo is responsible for clearing
payments in the form of debits (e.g. cheques), CreditCo is responsible for clearing credit
payments, while IRECC is responsible for clearing payments in the form of electronic debits and
credits. IPSO is an administrative/representative organisation for the payments industry in
Ireland and, as such, is not itself a payment system. However, all ordinary and associate
members of the clearing companies are also, by virtue of such membership, entitled to be
members of IPSO.
(e) Government Strategies for the Information Society
6.1 The parties submitted a copy of a Government Paper (1) entitled“Implementing the Information
Society in Ireland: An Action Plan”. They cited the following extracts from that paper –
“2. Rapid response is needed to ensure that the benefits of the Information Society
can be availed of by Irish citizens and Irish businesses, thus contributing to the
“30. The financial institutions will be requested to prepare proposals for appropriate
systems to facilitate further deployment of electronic payments in the economy.
Consultations will be held with the various interest groups with a view to agreeing
mechanisms to take work forward rapidly in this area. Mechanisms to progress this
area of work, involving representatives of the various interest groups, will be in place
“49. Electronic payment systems will be developed further within the public service,
and clients will be encouraged to take up electronic payment options. This will reflect
6.2 The parties stated that, in response to the Government request, and technological developments
generally in the area of payment systems, the banking industry commissioned outside consultants
to conduct a study in this area. The results of the study were presented to the Government by
IPSO in December 1999. The parties submitted that the study’s findings highlighted the
predominance in Ireland of cash and cheques as payment methods, and the insufficient use (by
comparison with other products) of electronic payment methods; that Ireland was lagging behind
Europe and the USA in the deployment of electronic payment solutions and methods for
consumers, business and Government, and that there would be significant economic benefits
accruing from the increased use of electronic payment. Four key areas were identified, one of
which was bill payment.
6.3 The parties also referred to a strategic review of the future of Irish banking, initiated by the
Minister for Finance. The Minister’s Review Group issued a Report in October 2000 entitled
“Banking Sector: Some Strategic Issues – Report of the Department of Finance/Central Bank
Working Group on Strategic Issues facing the Irish Banking Sector”. They cited the following
- paper-based banking transactions (e.g. OTC bill payments) were costly for banks and
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