Competition Authority investigates banking market

The Competition Authority (AdC) will launch a sector inquiry into retail banking in Portugal this year after identifying limitations on competition and the entry of new operators, particularly in the fintech sector.

Speaking to the budget and finance committee, AdC president Nuno Cunha Rodrigues said the purpose of this inquiry is to gather detailed information that will allow the regulator to "rigorous assess the degree of market contestability, the factors that affect consumer choice, and any existing constraints on the entry of new operators," which included digital platforms and non-banking entities.

Based on the analysis of the survey's results, recommendations can be made to operators, regulators, and legislators. Without specifying a completion date for the survey, Nuno Cunha Rodrigues emphasized that this type of initiative is "one of the AdC's fundamental intervention tools in a sector where competitive challenges are complex and constantly evolving."

The investigation into banking practices was announced shortly after the Competition Authority suffered a serious setback in the so-called banking cartel case, following a ruling by the Lisbon Court of Appeal that declared the sanctioned practices time-barred, resulting in a reduction in fines imposed totaling €225 million. The Competition Authority appealed this decision to the Constitutional Court, and Nuno Cunha Rodrigues pointed out "contradictions" in court decisions regarding the calculation of time limits and statutes of limitations— referring to the EDP ruling —which "create legal uncertainty and undermine the coherence of competition law enforcement, especially in complex and economically significant cases."

In a hearing focused on financial and banking issues, the President of the Competition Authority also recalled the results of a 2021 survey of 140 Fintech companies operating in Portugal or interested in entering. The results showed that three-quarters of these companies reported "significant barriers to entry in this sector, including difficulties accessing infrastructure such as SICOI, control of digital channels by dominant operators, and constraints on access to banking APIs (application programming interfaces), even after the European directive on payment services came into force."

The Competition Authority also sanctioned SIBS for abusing its dominant position in the payments system sector. This particular segment will also be targeted in the retail banking inquiry, Nuno Cunha Rodrigues added in response to the members of parliament.