Court overturns €225M fines for big banks

In September, another court ruled that the banks had colluded by exchanging information on mortgage loan spreads, amounts granted and aligned commercial practices between 2002 and 2013.

Photo by Moja Msanii on Unsplash

The Lisbon Appeals Court (TLR) has ruled that the high-profile banking cartel case, in which eleven of Portugal’s largest banks were fined €225 million for anti-competitive practices, has expired under the statute of limitations.

The decision, reached by majority vote, overturns previous rulings, but the case could still be taken to the Constitutional Court by the Competition Authority (AdC).

The Court determined that the case had legally expired as of September 1, 2023, or, at the latest, February 11, 2024, when considering COVID-19-related legal extensions.

This ruling annuls the penalties imposed in September 2023 by the Competition, Regulation, and Supervision Court (TCRS), which had found the banks guilty of exchanging sensitive commercial information over a decade.

Despite the ruling, the AdC has signaled its intention to appeal, stating that it “will explore all possible avenues” to challenge the decision.

The so-called “banking cartel” case had been classified as urgent due to the risk of expiration. The appeals court reached its verdict swiftly after receiving appeals from 11 banks late last year.

Background: Banks Accused of Anti-Competitive Practices

In 2019, the AdC charged 11 banks with colluding between 2002 and 2013 to share proprietary data on mortgage, consumer, and business loan spreads via email and phone.

The regulatory body argued that this practice distorted free market competition, violating European Union competition law.

The first-instance court upheld these findings, determining that institutions such as Caixa Geral de Depósitos (CGD), Banco Comercial Português (BCP), Banco Santander Totta, and Banco BPI had coordinated pricing strategies, impacting consumers seeking loans.

The original fines included:

• CGD: €82 million

• BCP: €60 million

• Santander: €35.65 million

• BPI: €30 million

• Montepio: €13 million

• BBVA (Portuguese branch): €2.5 million

• BES (under liquidation): €700,000

• BIC: €500,000

• Crédito Agrícola: €350,000

• UCI: €150,000

Legal Debate Over Statute of Limitations

The appeals court ruled that the 2012 Competition Law applies to the case, setting a maximum statute of limitations at 10 years and six months.

It also determined that the 2022 law, which allows for longer suspension periods, does not apply retroactively.

A key point of contention was whether a request for clarification from the European Court of Justice (ECJ) in 2022 suspended the statute of limitations.

The TRL decided that it did not, whereas prior court rulings have suggested that such a referral could pause the limitation period.

Next Steps: Possible Appeal to Constitutional Court

Although the appeals court ruling nullifies the fines, the AdC maintains that the decision does not invalidate the original findings of anti-competitive behavior.

The regulator and the Public Prosecutor’s Office are considering taking the case to the Constitutional Court, arguing that the limitations period was improperly calculated.

If no further appeal is successful, the banks will not face financial penalties despite the court’s confirmation that they engaged in illicit information-sharing practices.

The case has raised concerns about competition enforcement in Portugal, particularly regarding the timeliness of investigations. The initial probe was sparked by a whistleblower report from Barclays, which was also implicated but later received a reduced penalty.

While the court’s ruling spares the banks from financial penalties, consumer advocacy groups argue that the collusion led to unfair loan pricing, potentially costing borrowers millions.

The AdC has stressed that ensuring a competitive financial sector remains a priority.