España

Sentence from the Full sitting of the Court of Protection of Competition 5/7/1996

In the face of the similarity, said to be objective, of the interest rates for overdraft in current account and excess in credit accounts, of 32 banks, the Court of Protection of Competition decides to investigate the behaviour of these finance entities, supposedly suspected of having agreed to the fixing of interest rates in contravention of the principle of free competition

The finance entities are under obligation to communicate to the Bank of Spain the interest rate applicable to overdraft in current account and excess in credit accounts. The court has these communications between 1986 and 1993 at its disposal
Comisión EuropeaEscuela Europea de ConsumidoresGobierno de CantabriaMAG (Estudios de Consumo) S.L.IFAVConsomation et Logement Cadre de VieAssociation d'avocats

 

Some cases about over-indebtedness.

  

The court underlines that the interest rates that are object of the litigation, are conditions or clauses in the deposit contract in current account in the contract for opening a loan. Banks not only charge an interest rate for overdraft, but also charge commission on overdraft or excess of credit for the simple fact that this has occurred

The court also points out that overdrafts or excess of credit do not extend to very high amounts nor are they maintained for a long period of time, the payment of interests on overdraft is usually smaller than the sum of the commission charged by banks on overdrafts. From this it is deduced that if a client is overdrawn for a determinate sum of money and for a determinate period of time, the price paid for this circumstance should be different in the different banks investigated, although the nominal interest rate for overdraft may coincide

Furthermore the court affirms that the interest rates on overdraft, regardless of the fact that they may be a source of income to the banks and due to their high value, have a "deterring " and penalising character in extreme situations.
According to the court, "diligent" clients would provide the bank with means to avoid falling into overdrawn situations

The court concludes that there is no indication of agreed practice and thus finds that there has not been a violation of free competition and absolves the banks