According to CCP’s announcement on Monday, the commission had imposed a total penalty of Rs770 million, including Rs50 million on 1-Link (Guarantee) Limited, Rs50 million each on its 11 founding member banks, and Rs10 million on each of its 17 non-founding member banks for imposing uniform customer charges for Off-Us ATM cash withdrawal transactions in violation of Section-4 of the 2010 Competition Act.

When contacted, the SBP spokesman was not available for comment. The CCP has

imposed penalties of Rs50 million on 1-Link, and Rs50 million on each founding members — namely National Bank of Pakistan, Allied Bank Limited, Habib Bank Limited, Bank Al-Falah Limited, Askari Bank Limited, Soneri Bank Limited, NIB Bank Limited, United Bank Limited, Standard Chartered Bank Pakistan Limited, Faysal Bank Limited and Bank AL Habib Limited. It has also imposed Rs10 million on each non-founding members — namely Albaraka Bank Pakistan Limited, Burj Bank Limited, Meezan Bank Limited, Bank Islami, Khadim Ali Shah Bukhari Bank Limited, Habib Metropolitan Bank Limited, The Bank of Khyber, Dubai Islamic Bank Pakistan Limited, JS Bank Limited, Silk Bank Limited, The Bank of Punjab, Samba Bank Limited, Sindh Bank Limited, Barclays Bank PLC Pakistan Limited, Tameer Microfinance Bank Limited, Kashf Micro Finance Limited and Summit Bank Limited excluding Citi Bank which has not followed the collective behavior of charging uniform fee for Off-Us ATM transactions.

However, the Bench has granted exemption to the 1- Link Agreement entered into by and between founding members as well as the Inter Bank Fund Transfer (IBFT) Agreement entered into by and between 1-Link and TPS Pakistan (Private) Limited and ABN AMRO Bank NV (now known as Faisal Bank Limited), to the extent of interchange (bank-to-bank) fee for ATM cash withdrawals and IBFT services, as well as Utility Bill Payment Services (UBPS) Agreements entered into by 1-Link with utilities companies.

During the preliminary fact finding it was observed that 1-Link holds 80% of the market share in shared ATM network services in Pakistan and is a consortium of 11 major banks that are also represented on its Board of Directors while the other 20 banks happen to be its members.

To further assess the matter, the CCP approached the State Bank of Pakistan (SBP) to enquire whether it had fixed ATM charges as well. In response, SBP stated that banks were free to determine these charges. Moreover, in response to letters sent to various banks seeking rationale for uniform rates, two member banks of 1-Link confirmed that they had to comply with the schedule of charges devised by 1-Link. Therefore an Enquiry Committee was appointed to conduct an enquiry as to whether 1-Link and member banks were engaged in any prohibited activity in terms of Section-4 of the Act, and submit a detailed Enquiry Report.

The Enquiry Report concluded that 1-Link Agreement appeared to fix Off-Us cash withdrawal charges that other network parties/members had acceded to by signing an Accession Memorandum.

The parties pleaded before the Bench to grant them an exemption in respect of a fixed interchange fee for ATM cash withdrawals and IBFT services under Section-5 read with Section-9 of the Act. 1-Link also submitted applications in respect of 1-Link Agreement and IBFT Agreement to seek exemptions. With respect to this multilateral arrangement of a fixed interchange fee, the Bench observed that collaboration of 1-Link member banks to the extent of ATM network (1-Link) presented a scenario wherein banks agreed to permit their customers to use their cards at other member banks’ ATMs.

With respect to customer charges, during the hearing the parties maintained that Rs15 for Off-Us ATM cash withdrawal charges being the standardised fee fixed by SBP (the regulator) was passed on uniformly to the customers in good faith and without any agreement amongst them.

After hearing the parties at length and seeking clarification from SBP representatives during the hearing, the Bench held that SBP had prescribed the Rs15 ceiling considering it affordable for consumers and sufficiently remunerative for banks. Hence, it was not a fee fixed by the SBP. The Bench further held that 1-Link member banks were acting in a collective manner by charging a uniform fee to their customers for Off-Us ATM cash withdrawal transactions. The banks that were previously not charging have now also joined other banks in their practice of charging Rs15.