September 28, 2009
-
News: Hungarian Watchdog Levies Big Fines
The Hungarian watch dog for unfair market practices and anticompetitive behavior, the Hungarian Competition Authority GVH, is serious about holding banks accountable. In Budapest, the agency levied fines on the two major credit card networks and seven Hungarian banking institutions over $10 million for illegal card transaction fee pricing. According to the GVH, a secret deal that was made back in 1996 between the banks and retailers fostered and approved by the two major credit card networks, Visa Europe and MasterCard limited competition. The GVH indicated that the fines were originally set significantly higher, but because the banks and credit card networks cooperated, the agency reduced the amount of the fines.
Both Visa Europe and MasterCard credit card networks received a $2.6 million fine each. Fines for the seven banks were determined by their market share at the time of the agreement in 1996. Fines levied on the banks ranged from $500,000 to over $1.5 million. Hungary's largest bank, OTP, received the highest fine of a whopping $1.53 million. Both MasterCard and Visa Europe credit card networks were very disappointed with the decision of the agency. MasterCard representatives say they did not break any laws and would be appealing the decision. Visa Europe said they did not participate in any business during the time period in question. Visa believes the decision will be reversed and defended the banks' actions.
Tihamer Toth, the GVH Council Chairman stated that the decision and fines were an important part of maintaining the European Union. Six of the banks issued statements saying they would examine the decision documents before determining whether or not to appeal. Antal Kovacs, OTP's Deputy Chief Executive Officer, said the largest credit card lender would pay the fine and leave its option open to appeal. Visa Europe, MasterCard and all seven banks have up to 30 days to pay the fine and file an appeal.