The Competition Commission of Pakistan (CCP), exercising its powers under section 34 of the Competition Act, 2010, today conducted search and inspection of Pakistan Banks’ Association in Karachi to impound proofs of the association’s suspected role in providing a platform to banks for collusively determining uniform ATM charges.
Collusive activities are prohibited under section 4 of the Competition Act. The Commission had earlier conducted search and inspection of 1-Link as the banks charging uniform ATM charges are members of and 11 major banks constitute the Board of directors of 1-Link, and it was possibly playing front role in this collusive activity of fixing ATM charges.
The Commission took notice of ATM cash withdrawal charges implemented by banks in Pakistan as majority of banks, i.e. 26 banks, were charging uniform amount of Rs.15 for ATM cash withdrawal transaction. In the absence of any guideline from the State Bank of Pakistan, chargeability of ATM cash withdrawal services in a similar manner raised a suspicion of collusion among banks.
An enquiry conducted by CCP revealed that in Pakistan ATM cash withdrawal service is provided by two ATM networks/switch namely: 1-Link and Mnet. The State Bank of Pakistan has mandated that all commercial banks in Pakistan, both foreign and domestic, have to become members of one or the other switch to provide ATM services to their own customers as well as customers of other banks. 1-Link is a consortium of major banks (total 31) and owned by the consortium of 11 major banks that own and operate the largest representative shared financial services network of Pakistan, while Mnet switch has approximately 15 members.
During the enquiry, SBP informed CCP that the State Bank does not monitor and regulate banks at such micro level but it is discretion of banks to charge customers on ATM cash withdrawal services. Suspicion of collusion was strengthened by the fact that 31 banks are member of 1-Link which may provide them a forum to discuss and agree on ATM charges.
The Commission’s stance is that banks can be differentiated in terms of ATMs installed and transactions carried out on their ATMs, therefore, their ATM charges should also vary from each other under competitive conditions.
The Enquiry Committee of the Commission while examining the impounded documents from 1-Link has found evidence suggesting that Pakistan Banking Association (PBA), prima facie, has role in terms of discussion on pricing policy of banks in respect of ATM cash withdrawal charges.
Important data has been confiscated by the authorized officials of CCP, which will be scrutinized by the Commission. As reported by the authorized officers of the Commission, the officials of PBA provided full access to all the documents and records available in the PBA’s office. The Commission has appreciated the cooperation and respect for law exhibited by PBA.
