Credit Card Affinity Agreement between MBNA and ACC Bank: Competition Authority Decision


Competition Authority

Notification No. CA/3/01

Decision No: 592

MBNA Europe Bank Limited/ ACC Bank Plc (Credit Card Affinity Agreement)

Notification No. CA/3/01 - MBNA Europe Bank Limited/ ACC Bank Plc (Credit Card Affinity Agreement) Decision No: 592


Notification was made on 13 March 2001 of a Credit Card Affinity Agreement between MBNA Europe Bank Limited and ACC Bank Plc. 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 issue a certificate, a licence under Section 4(2). The agreement is an amended version of MBNA’s Standard Credit Card Affinity Agreement, Notification CA/1/98, which was granted a certificate by the Competition Authority (Decision 522).

The Facts

(a) The Subject of the Notification


2. The notification concerns a Credit Card Affinity Agreement (“the Agreement”) between MBNA Europe Bank Limited (“MBNA”) and ACC Bank plc (“ACC”). The agreement sets out the terms and conditions for the marketing of an MBNA/ACC credit card to ACC customers, employees and others. MBNA is not being given direct access to ACC’s customer lists.


(b) The Parties


3. MBNA Europe Bank Limited (previously MBNA International Bank Limited) is a wholly owned subsidiary of MBNA America Bank, N.A. a company incorporated in the United States of America and having its address at Wilmington, Delaware, 19-884-0785, USA. The company is registered in England and Wales and is acting through its Irish Branch Registered Number E3873 at 46 St. Stephen’s Green, Dublin 2. The principal activity of MBNA is the issuance of bank credit cards and ancillary activities in the United Kingdom and the Republic of Ireland. On its website, MBNA America Bank, N.A. states it is the largest independent credit card lender in the world and also provides retail deposit, consumer loan and insurance products, though not currently in the Republic of Ireland. It also states that it is by far the leading affinity marketing company in the credit card industry and has the endorsement of more than 4,700 organizations worldwide. In the year 2000, MBNA America Bank, N.A acquired 459 new endorsements from organizations, including 80 in Europe. The company states that it directs its marketing efforts primarily to members of endorsing groups, to customers of financial institutions, and to targeted lists of people with a strong common interest.


4. ACC Bank Plc is a credit institution incorporated in Ireland as a public limited company with its principal place of business at Charlemont Place, Dublin 2.


(c) The Product and the Market


5. The nature of the services affected by the Agreement is the provision of credit card services to Irish resident consumers. The relevant credit cards were designed for compliance with Irish law and cannot be marketed in any other jurisdiction. The notifying parties stated that the Irish credit card market was a subset of the total Irish market for payment cards. That total market could be divided into two sections:

  1. a. payment cards offering domestic and international acceptance; and

  2. b. payment cards accepted only in one or more domestic stores.


Within each of those sections there can be a number of competing product types:

  1. i. credit cards, where credit is advanced and may be left outstanding;

  2. ii. charge cards, where credit is advanced but must be repaid in full at the end of each billing period (usually one month); and

  3. iii. debit cards, where no credit is advanced, the card merely being used to access a current account.


6. The Agreement only relates to credit cards (i. above) offering domestic and international acceptance (a. above). Although the notification only concerns that part of the market so described, the notifying parties claimed that it should be considered in the wider context with the other product types (in both market sections) being seen as substitute and competing products.


7. The relevant market is that for the issuance of credit cards offering domestic and international acceptance, and the provision of credit card services in the Republic of Ireland.


(d) Structure of the Market


8. The provision of credit card services is divided into two levels, credit card issuers (“Issuers”) and credit card acquirers (“Acquirers”). Issuers provide the actual cards, related account and credit facilities to consumers, subject to the Issuer’s terms and conditions. The main Issuers in the State are Allied Irish Banks plc and Bank of Ireland. Acquirers provide credit card acceptance facilities to merchants. An Acquirer will arrange payment to a merchant for credit card transactions and will in turn be reimbursed by each relevant Issuer. The main Acquirers in the State are Allied Irish Banks plc and Bank of Ireland.


9. In addition, to enable a credit card to be accepted for payment it is necessary for the relevant Issuer and Acquirer to be a member of the same payment system. The two main international payment systems are VISA and MasterCard both of which are wholly owned by their respective members. The payment systems provide a global framework and rules for use of affiliated credit cards


10. MBNA does not operate as an Acquirer and has no current intention to do so. MBNA commenced operations in Ireland as an Issuer in March 1997; the Agreement relates solely to its activities as an Issuer.


11. The notifying parties believed that market share (by number of cards issued) was currently distributed amongst Issuers as follows;


Table 1:


Market Share

Allied Irish Banks plc

[ ]%

Bank of Ireland

[ ]%


[ ]%

TSB Bank

[ ]%

Ulster Bank, National Irish Bank and Tesco

[ ]%

ACC Bank

[ ]%


[ ]%


12. The parties stated that there were substantial barriers to entry to the market. In order to become a...

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