After 18 months of investigation, the European Commission published its final report of its inquiry in the retail banking sector. It concludes that there are a number of competition concerns in the markets for payment cards, payment systems and retail banking products. The Commission’s inquiry indicated a number of concerns:

# Highly concentrated markets in many Member States.

# Large variations in merchant fees across the EU. 

# Large variations in interchange fees between banks across the EU, which may not be passed on fully in lower fees for cardholders. 

# High and sustained profitability suggests a significant market power by banks in some Member States.

After publication of the interim report on payment cards and systems in April 2006, the Commission met with a number of banks which have taken initial steps to address the Commission’s concerns.

Nonetheless, the sector inquiry found indication of competition problems in several areas such as 

# the banks’ ability to influence the level of prices for consumers and small firms 

# the use of some credit registers to exclude entrants to retail banking markets 

# some aspects of cooperation among (savings and corporate) banks may reduce competition and deter market entry

# product tying between loans and extra insurance, 

# obstacles to consumer mobility in banking

The Commission announced that it will use its powers to tackle abuses and remove these barriers, working closely with national competition authorities. [31 January 2007]