On 1st March 2018 Bulgarian Competition Protection Commission (CPC) opened a sector inquiry of the banking services provided by the banks - members of the Association of the Banks in Bulgaria (ABB).

The Background

In its opening decision CPC points the consolidation process in the banking sector after 2008 as main reason for the inquiry. Further, CPC states that it has reviewed the public interests’, fees’ and commissions’ tariffs applied by the banks within ABB. According to CPC this information makes the thorough analyses of the competition environment in the banking sector necessary. As per the decision CPC will scrutinize the banking sector in Bulgaria within the period 2015 – 2017.

CPC’s Next Steps

Within sector inquiry procedure CPC will request information about relevant markets from the Bulgarian supervisory authorities and branch associations. In view of the CPC’s practice so far, CPC may request information also from ABB and its members, their competitors, key customers, commercial partners as well as any third party concerned. In the announcement of the sector inquiry CPC calls the public to actively cooperate and provide CPC with relevant information and data. CPC is not empowered to conduct dawn raids within the sector inquiry.

Depending on the findings within the sector inquiry CPC may: (i) open investigations for establishment of concerted practices, abuse of dominant position or non-notification or prior implementation of concentration of economic activity; (ii) inform competent authorities about the measures for improvement of the competition which have to be undertaken; and (iii) provide National Assembly and/or Council of Ministers with the inquiry.

Previous Sector Inquiry

CPC conducted already a sector inquiry of the banking sector in 2008. This first sector inquiry covered the national retail banking markets of deposits, housing loans and consumers credits within the period 2006 – first half of 2008. CPC concluded that the concentration level on the relevant markets within said period was relatively low and it found a positive trend of competition improvement. CPC did not establish undertaking with dominant position on the relevant markets despite on-going consolidation. However, CPC made in its final decision some recommendations for improvement of the competition environment. The recommendations concerned access and functioning of the Central Credit Register, application of common comparable criteria for deposits’ offers, calculation of the annual costs percentage and information provided to the consumers.

Banking Sector between the Sector Inquiries

Despite CPC found improvement of competition environment on the retail banking markets within the period 2006-first half of 2008, in 2009 CPC opened an antitrust investigation against ABB. The investigation was opened upon signals for concerted practices from two NGOs due to parallel dramatic increase in the housing loans and consumers credits at the end of 2008. Within the investigation CPC conducted dawn raids in the ABB’s offices. However, CPC did not found cartel among members of ABB.

In 2012 CPC conducted preliminary check for opening cartel investigation against banks in Bulgaria. However, the preliminary check did not result into opening of investigation.

According to CPC’s annual reports a total number of 12 concentrations of economic activity in the banking and financial sector have been notified to the CPC which shows a continuous consolidation process in both sectors.