As outlined in its recent press release, the Hungarian Competition Office (“HCO”) initiated a sectoral inquiry to assess the conditions of competition in the market of payment card acceptance services. After multiple cartel investigations affecting the Hungarian banking sector in recent years, this is yet another sign that the HCO is keeping a close eye on financial services.
In this sectoral inquiry, the HCO seeks to analyse the conditions of competition for payment card acceptance services and the competition constraints represented by other, innovative cash equivalents. The inquiry will also assess the likely future trends in the market and impacts of recent changes in the relevant legislation (e.g. legislation affecting the multilateral interchange fee). Although the HCO stressed that the launch of the sectoral inquiry does not mean that there are competition law issues, the obstacles to effective competition in the market of payment card acceptance services, if any, must be identified.
There is currently a general aim at promoting cash equivalent payment methods which incur lower costs than cash transactions. The HCO has noticed that smaller merchants are likely to face higher service charges when introducing and operating payment card acceptance services than their larger competitors. Merchants typically face a variety of costs when they opt for introducing payment card acceptance services. Besides fixed cost elements, merchants have to pay a merchant service charge to the accepting bank (i.e. the bank providing the point-of-sale terminal which enables card payments), which is a certain percentage of the value of the transaction. Before launching the sectoral inquiry, the HCO ordered a market study from an independent research company, the result of which (made public on the HCO’s website) confirmed the need for further in-depth review.
The sectoral inquiry will directly affect the market players. The HCO will start by sending out questionnaires to request information from the banks which issue and accept payment cards. The response to such information-requests can have a heavy impact on the outcome of the inquiry. At a later stage the HCO will also contact the card companies and the merchants.
The report summarizing the HCO’s findings is expected to be published in July 2018. Should the HCO find that there is need for its involvement to restore effective competition, it may also subsequently launch separate investigations against one or more market players.
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