EU Competition Enforcement in the Payments Sector

Prior to the adoption of PSD, European competition law was the only area of law regulating competition in the European market for electronic payments (Payments). Contrary to the financial services regulatory framework, the European competition law framework is sector agnostic, which means that the same requirements apply to different categories of financial institutions, let alone different types of payment service providers (PSPs). Nowadays, the financial services regulatory framework and the competition framework both share the objective of enhancing competition in the market for Payments, albeit that the financial services regulatory framework focusses primarily on market entrance and payment system access. The main objectives of European competition law include: (i) the protection of competition; and (ii) the enhancement of the functioning of the internal market. To this end, European competition law provides for rules on inter alia antitrust and merger control, whereby there has been a particular focus in the market for Payments on anti-competitive agreements and abuse of dominant market positions. For a network-based sector like the Payments sector to function efficiently (i.e., processing Payments swiftly and with low costs), it is essential that PSPs apply the same standards for exchanging Payment messages and processing Payments (also referred to as interoperability). The use of the same standards requires a form of collaboration between competing PSPs. This chapter focusses on EU antitrust rules in the market for Payments, which involve a prohibition on anti-competitive agreements and the abuse of a dominant market position. Particular attention is paid to the conditions under which competing PSPs are allowed to agree with each other on the application of particular standards for exchanging Payment messages and processing Payments.