Payment Systems Regulator Publishes Guidance on Concurrent Competition Powers

On 13 August 2015 the Payment Systems Regulator (PSR) issued guidance on how it will apply its concurrent competition law powers in relation to participation in payment systems.

The PSR was established on 1 April 2014 as the regulator for payment systems in the UK.  The PSR derives its powers from the Financial Services (Banking Reform) Act 2013 (FSBRA).  With effect from 1 April 2015 the PSR has powers to enforce the UK competition law prohibitions on restrictive agreements and abuse of dominance (i.e. the Chapter I and II prohibitions of the Competition Act 1998 (CA98)) and their EU law equivalents under Article 101/ 102 TFEU, in relation to agreements and conduct relating to participation in payment systems.  As from 1 April 2014 the PSR also has powers to carry out market studies and to refer markets to the Competition and Markets Authority (CMA) for investigation.  These powers may also be exercised by the CMA whose powers extend to all sectors of the economy.

The PSR’s final guidance is accompanied by a Policy Statement explaining its responses to feedback received on its consultation on the draft guidance launched in January 2015.

The PSR has a ‘primacy’ obligation in that before exercising certain of the PSR’s regulatory powers under FSBRA it has a duty to consider whether it would be more appropriate to proceed under CA98.  The specified powers are as follows:

Section 54 FSBRA - to give a direction (apart from the power to give a general direction)

Section 55 FSBRA - to impose a requirement (apart from the power to impose a generally-imposed requirement)

Section 56 FSBRA - to require the operator a regulated payment system or a payment service provider with direct access to grant access to that payment system

Section 57 FSBRA - to change the fees, charges, terms and conditions of an agreement relating to a regulated payment system

Section 58 FSBRA - to require the disposal of an interest in the operator of a regulated payment system

The PSR also reminds participants in a regulated payment system that they should bring actual and possible contraventions of competition law to the PSR’s attention in accordance with their regulatory obligation under General Direction 1.  The PSR can accept leniency applications but it expects leniency applications to be made directly to the CMA

Following its own consultation launched on 15 January 2015, on 15 July 2015 the Financial Conduct Authority (FCA) also published its final guidance documents on its concurrent competition powers.

While cases may be transferred between concurrent authorities, only one authority can exercise prescribed functions in respect of a case at any moment.  The Competition Act 1998 (Concurrency) Regulations 2014 set out how information will be shared between relevant competent authorities and how cases will be allocated. The general principle is that the regulator that will be responsible for a case depends on which one is better or best placed to do so.  The fact that the Government has conferred concurrent competition law powers on both the FCA and the PSR is an indication of its sustained focus on competition law in the financial services sector.