The Competition Authority authorises cooperation regarding an agreement on the handling of debt matters for small and medium-sized enterprises.

Detailed conditions set for the partnership

The Competition Authority has today published a decision authorising cooperation regarding an agreement on the handling of debt matters for small and medium-sized enterprises, which was signed yesterday. The contracting parties are financial institutions and business interest groups, as well as the Ministry of Finance and the Ministry of Economy and Commerce.

Collaboration between competitors in a market is prohibited under Article 10 of the Competition Act. Under Article 15 of the same Act, the Competition Authority may grant exemptions from this prohibition and subject such collaboration to conditions.

In the view of the Competition Authority, it is clear that the financial restructuring of companies has been slow. In the Competition Authority's discussion paper No. 2/2009, 'Banks and Corporate Restructuring – Policy Guidance', published in December 2009, specifically points out that economic arguments and the experience of other countries show that it is necessary to respond quickly to the debt problems of viable companies. It is therefore in the interests of consumers and the business community for banks to write off or reduce the debts of viable companies.

On this basis, among other things, the Competition Authority considers it appropriate to grant financial institutions and business interest groups an exemption for co-operation in respect of the agreement.

On the other hand, the Competition Authority considers that cooperation of the kind provided for by the agreement could, particularly in the long term, allow competitors in the financial market to coordinate prices, terms of business and product range to the detriment of customers and consumers. In order to prevent this, the Competition Authority considers it necessary to impose the following conditions on the cooperation:

• That a financial institution is, despite the agreement, permitted to offer its customers better terms and adopt criteria that are more favourable to them.
• It is explicitly stated that the exemption does not grant the right to further harmonisation of prices and commercial terms than that provided for in the agreement. Any such changes to the agreement must be submitted to the Competition Authority in advance.
• Clear rules are established for cooperation under the agreement. Accordingly, a government representative is to be present at cooperation meetings, which must be minuted. Furthermore, it is necessary for each financial institution to take measures to ensure that the cooperation arising from the agreement does not result in competitive harm.
• The exemption is temporary and is valid until the end of the year. 2011. At its conclusion, an account shall be given of the implementation of the cooperation and how the cooperation is to be terminated.
• The exemption only entitles financial institutions to co-operate in a way that would otherwise contravene section 10 of the Competition Act. Other parties to the agreement, such as the Federation of Business Associations, are not granted an exemption to co-operate in their own sphere.