The Norwegian competition authority has launched an investigation into competition in the country's banking market. This is the first step towards a possible market investigation into the banking sector, which can lead to action if market conditions are deemed to be reducing effective competition.
Í News from the Norwegian supervisory authority It is noted that active competition can, among other things, lead to lower interest rates on mortgages, higher interest rates on savings accounts and lower service charges. Furthermore, previous observations have suggested, among other things, low customer mobility, barriers to new competitors and market conditions that could facilitate the coordination of interest rate levels between banks.
Páll Gunnar Pálsson, Director General of the Competition Authority, says that the institution will review the Norwegian market study once its findings are available.
„We will familiarise ourselves with this review by the Norwegian competition authority and any conclusions that may be drawn from it. The Competition Authority has addressed various issues now on the agenda in Norway in previous cases, such as facilitating customer mobility between service providers by promoting lower switching costs. The Competition Authority has done this both by entering into settlements with the banks and by making recommendations to the government.
It should be noted that although the ratio of operating costs to income for Icelandic banks has fallen significantly in recent years and now fully stands up to comparison with larger Nordic banks, the total interest margin of Icelandic banks has not decreased in parallel over the same period. The banking markets in the Nordic countries have much in common, and the investigation by the Norwegian competition authorities could therefore have some value when assessing the competitive conditions in this country, such as with regard to the analysis of the impact of increased technological advancement in banking services on operating costs and the interest rate spread, and also with regard to circumstances that may facilitate the harmonisation of interest rate levels between banks,“says Páll Gunnar Pálsson, Director of the Competition Authority.
Authorisation for market research an important tool
Páll Gunnar also points out that the Icelandic Competition Authority has comparable powers to conduct market investigations under competition law and rules No. 490/2013 on the market research of the Competition Authority.
„Market research is an important tool for responding to competition problems that may arise from market structure, the behaviour of firms, or other circumstances that reduce the effectiveness of competition. Such investigations can, among other things, focus on market concentration, barriers to entry or other factors that affect competitive constraint, even where there is no breach of competition law. However, these powers have not been accompanied by adequate funding, and therefore they have not been utilised as would have been desirable.“says Páll Gunnar.
The Norwegian Competition Authority will now gather information from banks and other market players, and 14 banks will be required to provide the necessary data for the review.
"*" indicates required fields
