LITHUANIAN COMPETITION COUNCIL IMPOSES FINES ON SECURITY SERVICES PROVIDER AND THREE BANKS FOR RESTRICTING COMPETITION IN CASH HANDLING AND CASH-IN-TRANSIT SERVICES

Today the Lithuanian Competition Council imposed fines exceeding LTL 57 million (EUR ~16 million) on the provider of security services G4S Lietuva (G4S) and three major banks in Lithuania: AB DNB bank, AB SEB bank and Swedbank (together the Banks). The fines were imposed because G4S and the Banks concluded agreements which restricted competition in cash-in-transit (CIT) and cash handling services’ markets.

As the Banks committed themselves to buying all cash handling services exclusively from G4S, the ability of other providers of such services to compete has been significantly restricted. For the duration of the agreements, the Banks could not use cash handling services provided by the competitors of G4S even if the former were to make better offers. It is important to note that the cash handling costs incurred by banks are eventually covered by consumers when paying banks’ cash withdrawal from ATMs, currency exchange or other cash handling related fees.

Provision of cash handling services is closely related to provision of CIT services, which are provided to the clients of the Banks (companies). These circumstances meant that the above mentioned agreements were harmful to the clients of the banks as well. The clients of the Banks could not choose any other provider of CIT services but G4S.

Competition between suppliers of goods and services encourages them to compete for consumers and to ensure better prices and quality. Thus, when firms act in a way that restricts buyers’ choice of acquiring competing goods or services, such actions, when long-lasting and affecting large portion of the relevant market, are harmful to buyers, may exclude competitors, and weaken or even completely remove competition.

After considering all the circumstances under investigation, the Lithuanian Competition Council has found G4S and the Banks in breach of Article 5 of the Law on Competition prohibiting anticompetitive agreements. In addition, in view of the nature and the scope of the actions concerned, the agreements have been found to violate Article 101 of the Treaty on the Functioning of the European Union.

The Lithuanian Competition Council has imposed fines for the competition restricting agreements the total sum of which exceeds LTL 57 million (EUR ~16 million). The fines have been imposed taking into consideration that G4S had significant market share of CIT and cash handling services and that the infringements lasted for a long period of time (from 3 years and 2 months to 5 years and three months). The Council also took into account the fact that the Banks had limited the opportunities of their clients to choose providers of CIT and cash handling services and buy such services at competitive prices.

In relation to the anticompetitive agreements concerned, the following fines have been imposed:

G4S – LTL 9 437 800 (EUR ~2 735 594)

AB DNB bank – LTL 8 630 200 (EUR ~2 501 507)

AB SEB bank – LTL 24 808 200 (EUR ~7 190 782)

Swedbank – LTL 14 243 600 (EUR ~4 128 579)

Initially, the amount of the fine calculated for G4S was three times bigger than the actual fine imposed, but the amount was decreased to 10 percent of the firm’s gross annual income, this being the maximum fine that can be issued for infringing the Law on Competition.

The order to terminate the anticompetitive actions has not been issued because the Banks and G4S had stopped these actions as the investigation was coming to a close.

The full decision text can be found (in Lithuanian) here.

Notes

(1) Cash handling services – services provided to banks that include transportation of collected cash, cash processing (counting, sorting, etc.) and storage.

(2) CIT services – services provided to banks’ clients that include cash collection from clients (mainly retailers), transportation of collected cash to a re-count centre, cash processing (counting, sorting, etc.) at the re-count centre and transfer of cash to a client’s account by using a direct connection with the bank.

Communication Division of Lithuanian Competition Council