The Norwegian Competition Authority is launching a sector inquiry to analyse competition between banks. This is the first step towards a potential market investigation in the banking sector.
Banking services, in particular the terms and conditions for deposits and residential mortgages, are of great importance to the financial situation of Norwegian households. More effective competition can lead to lower mortgage interest rates, higher deposit rates and lower fees. Even small differences in interest rates can amount to several thousand NOK per year for individual households. It is therefore important that competition between banks functions well.
The purpose of the sector inquiry is to map and assess various factors that may affect competition. The Norwegian Competition Authority will now collect information from banks and other stakeholders with in-depth knowledge of the market. If the inquiry identifies conditions indicating that competition is materially restricted, the Authority may proceed with a formal market investigation.
– The power to carry out market investigations was introduced last year and is intended to address competition problems that do not stem from infringements of the Competition Act. The sector inquiry will provide us with solid and up-to-date knowledge of the banking market, enabling us to assess whether there are grounds to move forward with a market investigation, says Director General of Competition, Mads Magnussen.
In a market investigation, the Norwegian Competition Authority may impose remedies to improve competition. Experience from other jurisdictions shows that this type of intervention can deliver significant benefits for consumers.
– In previous examinations of the banking market, we have observed, among other things, low levels of customer mobility, a range of barriers to entry and expansion for banks, and market features that may facilitate coordination of interest rate levels. These factors have given rise to concerns that competition between banks has not been sufficiently effective. We will now carry out new analyses to assess the current competitive situation, says Line Djupvik Andersen, Project Manager at the Norwegian Competition Authority.
The Norwegian Competition Authority will now start the process of collecting information on the banking market. A selected group of 14 banks will be required to provide the necessary information.
Facts:
Sector inquiry
- A sector inquiry is a broad examination of various aspects of a market that may affect competition.
- The inquiry focuses on market conditions rather than individual undertakings.
- The objective is to understand how the competition in this market works and to identify factors that may restrict competition.
- A sector inquiry is the first step towards a market investigation.
Market investigation
- A market investigation is a more targeted examination of specific market features that restrict competition.
- In a market investigation, the Norwegian Competition Authority may impose measures to improve competition in the market concerned.
- A market investigation does not imply that an infringement of the Competition Act has occurred.
- The procedure for market investigations is laid down in the Competition Act, including rules on process and statutory time limits.
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Mads Magnussen, Director General of the Norwegian Competition Authority.
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Project manager Line Djupvik Andersen in The Norwegian Competition Authority
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