The Cyprus Commission for the Protection of Competition announced on the 24th of November 2005 its decision on the case of the ex-officio investigation of JCC Payment Systems Ltd, a company offering merchant acquiring services in Cyprus.
The Commission has found that JCC Payment Systems Ltd infringed the Law 207/89 as amended on the Protection of Competition and has imposed a penalty amounting to CYP 373.374,49.
The infringements cited by the Commission are as follows:
1. Infringement of articles 6(1) and 6(2)(a) of the Law 207/89 as amended, for abusing its dominant position by imposing unfair charges for providing its services and for renting of POS equipment.
2. Infringement of articles 6(1) and 6(2)(b) of the Law 207/89 as amended, for abusing its dominant position by engaging in agreements for the supply of its services to merchant banks which included the following condition: «JCC may terminate the agreement immediately, upon written notice to the Bank , if the Bank becomes directly or indirectly a competitor in the Merchant Acquiring business in Cyprus» resulting in the restriction of competition.
The Commission, in determining the level of the penalty, has taken into consideration the following:
1. The competency of the Commission to finding infringements of the Law and its powers as set out in article 22(3) of the Law, as per which, the Commission has the power to impose a financial penalty, according to the gravity and duration of the infringement, not exceeding 10% of the annual revenue of the undertaking or trade association in the year within which the infringement took place or in the year which immediately preceded the infringement.
2. The nature of the general infringements and the general circumstances under which the infringement took place, as well as the market conditions, the duration of the infringement and the role of the undertaking involved in the infringement and its ability to restrict or distort competition.
3. The monopolistic position of JCC Payment Systems Ltd in the supply of merchant acquiring services.
4. The significance of the relevant market and the effects of the conduct of the undertaking involved, on its customers and the consumers at large.
5. The full co-operation of JCC Payment Systems Ltd with the Service of the Commission. A decisive factor in the decision of the Commission was the fact that JCC Payment Systems Ltd did not contest the charges of the Commission.
6. The prompt response of JCC Payment Systems Ltd and its legal counselors throughout the investigation and the proceedings of the Commission, resulting in an accelerated conclusion of the case.
7. The Commitment Document submitted by JCC Payment Systems Ltd which includes the following commitments:
- Immediate abolition of the restrictive conditions in its agreements
- Gradual reduction of the charges imposed on merchants
- Immediate reduction in the rent charged for POS equipment
8. The compliance of JCC Payment Systems Ltd, before the initiation of the investigation by the Commission, with the Competition legislation, with regards to the discriminating charges and other terms of co-operation for certain categories of merchants and banks.
9. The initiative on the part of JCC Payment Systems Ltd for reducing the time period for the transfer of funds to the merchants, without this being an issue raised by the Commission.
10. The aggregate turnover of JCC Payment Systems Ltd for the year 2004.
JCC Payment Systems Ltd is a private company registered in Cyprus whose main activity is the supply of merchant acquiring services. The company was established in 1987 by the Bank of Cyprus Ltd. At a later stage the Cyprus Popular Bank became a shareholder and shortly afterwards other banking institutions in Cyprus became shareholders under the formation of a consortium which now includes: Hellenic Bank, National Bank of Greece, Alpha Bank and Arab Bank. The representatives of the above mentioned banks and the consortium constitute the Board of Directors of the company. Other commercial banks in Cyprus, which are not shareholders in the company, make use of the services offered by JCC Payment Systems Ltd.
After the announcement and the delivery of the decision of the Cyprus Commission for the Protection of Competition, the legal counselors of JCC Payment Systems Ltd have declared that they will fully respect the decision of the Commission.