The Australian Competition Tribunal decision yesterday to deny authorisation* to an agreement to fix the wholesale fees for electronic funds transfer at point of sale (EFTPOS) transactions at zero means changes to the system can now best be achieved through a regulatory solution, ACCC Chairman, Mr Graeme Samuel, said today.
"The ACCC welcomes the Tribunal's regard for the importance of access reform in these arrangements. The ACCC has always considered this to be the key reform needed for the EFTPOS system.
"In its decision, the Tribunal noted that there was general agreement that 'access reform was desirable because it would enhance competition, and as a consequence efficiency'.
"However, the Tribunal said that 'all other things being equal, to achieve that objective by access reform, rather than an agreement which was per se unlawful', was preferable".
In a Tribunal hearing the applicants seeking authorisation, in this case a group of financial institutions**, must satisfy the Tribunal that the required behaviour, in this case interchange fee reform, would result in a net public benefit.
In this matter, the Tribunal considered that on the evidence available any public benefits were clearly outweighed by the detriments.
In its comments, the Tribunal noted what it described as a 'lack of hard information by the banks'.
"At the time of its draft determination, the ACCC proposed to deny authorisation because the benefits and detriments of the agreement were finely balanced", Mr Samuel, said.
"But assurances from the Australian Payments Clearing Association that it was developing an access regime as a priority; and a Reserve Bank of Australia submission that should industry efforts to voluntarily reform access falter the RBA 'would seriously consider, in the interests of promoting efficiency and competition in the Australian payments system, designating the EFTPOS system' led the ACCC to finally grant the authorisation.
"There were a number of conflicting interests, particularly between retailers and banks, as to the nature of the preferred outcome of reform to the Australian payments system. The Tribunal considered a proposal for what was essentially voluntary reform, proposed by the banks. Given the retailers challenge, this voluntary reform will not proceed as proposed.
"Reform of the EFTPOS system would now be better handled by a regulated regime".
* The Trade Practices Act 1974 prohibits certain forms of anti-competitive agreements, including agreements between competitors that limit their ability to deal with whom they choose or on the terms they choose (including price). Authorisation provides immunity from court action under the Act arising from such agreements but can only be granted where the ACCC, or following an application for review the Australian Competition Tribunal, is satisfied that the public benefit flowing from the conduct outweighs any public detriment.
** The applicants for authorisation are: Australia and New Zealand Banking Group, Australian Settlements Ltd, Bank of Queensland, Bank of Western Australia Ltd, Bendigo Bank, Cashcard Australia Ltd, Commonwealth Bank of Australia, Credit Union Services Corporation (Australia) Ltd, National Australia Bank, St. George Bank Ltd, Suncorp Metway Limited, and Westpac Banking Corporation.