In April 2020, the German Federal Court of Justice ("Court") confirmed that certain market participants in the financial sector violated competition law by jointly agreeing on provisions restricting the use of their customers' PIN and TAN codes for purposes of arranging payments via third-party payment operators (case no. KVR 13/19).
| what you need to know - key takeaways |
- Competition watchdogs in Germany continue to focus on the financial services industry.
- Companies in all fields of business should carefully consider antitrust compliance when consulting with professional associations, and participating in events and initiatives organised by those associations.
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In 2016, the German Federal Cartel Office ("FCO") found that certain contractual clauses negotiated by a number of companies active in the financial services sector violated German and European competition law. The relevant clauses were agreed via a professional association, which the relevant companies participated in. These provisions restricted online banking customers' use of their personalised security features. In particular, under the applicable Terms and Conditions, customers were prohibited from using their PIN and TAN codes to access their accounts when using independent online payment service operators' platforms, such as "Klarna". According to the FCO, these restrictions undermined the business models of these third party platforms. The FCO did not consider these restrictions indispensable to ensuring security in online banking. Instead, the FCO concluded that the main purpose of the specific provisions was to hinder the disruptive impact of non-banking payment service operators.
In its recent judgment, the Court has confirmed that the FCO applied the correct approach in its assessment of the restrictions, and that the FCO reached the correct conclusion.
The case clearly points out that the German competition watchdog remains keen to foster vigorous competition in financial services markets, which is good news for the evolving FinTech industry. The decision is also a reminder that anti-competitive practices involving professional associations are still very much an enforcement priority in Germany.
