CCP raids banks’ association office, impounds evidence

Banks allegedly colluded to charge customers uniform ATM charges.

ISLAMABAD: The country’s anti-trust watchdog on Tuesday conducted a raid on the Pakistan Banks’ Association (PBA) office to impound evidence of the association’s suspected role in providing a platform to various banks to collude against consumers.

The Competition Commission of Pakistan (CCP) ordered the bust at PBA’s office in Karachi to seize proofs of the organisation’s alleged role in aiding banks collusively determine uniform automated teller machine (ATM) charges, announced the anti-trust watchdog.

The CCP decided to conduct the raid after it found evidence during its investigation of the 1-Link case that suggested PBA’s involvement, prima facie, on account of a discussion on pricing policy of banks with respect to ATM cash withdrawal charges.

“The Commission’s stance is that banks can be differentiated with regard to ATMs; therefore, their ATM charges should also vary from each other under competitive conditions”, said an official statement.

Under the Competition Commission Act, no entity can indulge in collusive activities that discourage competition in the market.

The Commission took notice of ATM cash withdrawal charges implemented by banks in Pakistan as a majority of banks, 26 to be precise, were charging a uniform amount of Rs15 for every ATM cash withdrawal transaction. In the absence of any such guideline from the State Bank of Pakistan, charging uniformly for ATM cash withdrawal services raised suspicions of collusion among the banks, said the CCP.

During the enquiry, the State Bank of Pakistan told the CCP that it does not monitor and regulate banks at the micro level, and it is the banks’ discretion to charge customers on ATM cash withdrawal services.

An enquiry conducted by the CCP disclosed that all ATM cash withdrawal services are provided by two ATM networks; 1-Link and Mnet.

The CCP said its suspicions of collusion were strengthened by the fact that 31 banks are members of 1-Link, which may have provided them with a forum to discuss and agree on ATM charges.

The CCP has confiscated important data which will be scrutinised by the Commission, said an official handout. As reported by the authorised 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.

Published in The Express Tribune, February 15^th, 2012.