13.10.3 How is the price leadership ban elaborated in the decisions?

The price leadership ban in the case of ING may serve as an illustration of how a price leadership ban can be formulated:

The price leadership ban in the case of ING also illustrates the various modalities of a price leadership ban. The modalities concern the relevant market (“standardized ING products”) and a threshold (“market share of more than 5%”). Another modality of great importance is the standard of comparison (“its three best priced direct competitors”).

Not all price leadership bans are formulated in this way. On the contrary, in each case, they are formulated differently: the specific modalities of the price lead-ership ban differ among the 13 cases in which the price leadership ban was imposed.

This modality is sometimes elaborated. This can be illustrated by the case of KBC. As set out in subsection 13.10.2, the price leadership ban in the case of KBC did not apply to the Belgian market. This was explained by the fact that significant pro-competitive structural commitments had been provided: KBC would divest Centea and Fidea, which would lead to improved competition on the Belgian market.

A price leadership ban is usually limited to markets where the bank has a sig-nificant presence (i.e. at least 5%). However, the Commission imposed a price leadership ban on ING Direct Europe, regardless of its market share. According to the Commission, this was justified because it had received information alleging that ING Direct Europe had engaged in aggressive commercial behaviour.2

The finding that the modalities differ among the bank State aid cases is most notable with respect to the standard of comparison. Some price leadership bans stipulate that the bank may not offer more favourable rates than its cheapest or best priced) competitors3, and some price leadership bans stipulate that the bank may not offer more favourable rates than its largest competitors4. Sometimes, it is a combination (“the best priced competitor among the top 10 market players”).5 In addition, the number of competitors that are included in the standard of comparison differs.

Given these differences, one would expect that the Commission decisions provide some explanation as to why a certain standard of comparison is chosen. This is, however, not the case. The Commission decisions do contain some considerations with respect to the question why a price leadership ban was needed, but the standard of comparison is usually not elaborated in the decisions.

In the section that discussed the acquisition ban, it was remarked that the Commission should take into account the different modalities of the acquisition ban. In the same vein, the Commission should take into account the different modalities of the price leadership ban. To some extent, this is done by the Commission. Indeed, the decisions usually contain some explanation regarding the relevant market and the threshold. However, the standard of comparison is not explained in the decisions. As shown in the present section, the price leadership bans differ with respect to the standard of comparison.6 Not taking into account these differences would – in my opinion – amount to an inconsistency.

What are the implications of this finding? Normally I would expect the Commission to take action in order to remedy an inconsistency. However, since it appears that the Commission no longer requires a price leadership ban, the finding that the Commission did not take into account certain differences in the modalities, has lost its relevance for future cases. In that regard, it should be recalled that – even though the method of this PhD-study is backward-looking – its ultimate aim is forward-looking.