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The Italian Competition Authority’s enforcement against so called “IBAN discrimination” practices

  • Italy
  • United Kingdom
  • Competition, EU and Trade - Competition e-briefings



The Italian Competition Authority (“ICA”) has recently adopted a harsh approach imposing quite significant fines on those operators who accept direct debit payments only to the extent that their customers are holders of an Italian banking account.

In particular, back in April 2019, the ICA has fined the main Italian telco operators (Vodafone, Wind Tre, Fastweb), finding that these companies did not allow their fixed and mobile customers to pay their subscriptions via bank domiciliation on banking accounts opened with banks based in EU countries other than Italy, thus giving rise to a geographical discrimination in the use of the aforementioned payment means.

According to the ICA, such conducts infringed the principle of non-discrimination between Italian banking accounts and foreign accounts laid down in Article 9 of Reg. (EU) n. 260/2012 establishing the SEPA system. Furthermore, back in September 2019, an investigation has been opened by the ICA against Telepass (the Italian leading provider of payment systems for motorway toll) in relation to the allegedly same conduct put in place by such operator.

Accordingly, it is quite clear that for the ICA such matter of “IBAN discrimination” is of primary importance and at the top of the enforcement agenda so that an ICA’s in depth analysis of a number of sectors is ongoing.


Breach of Reg. (EU) 2012/260 on SEPA system and of Reg. (EU) 2018/302 on geo-blocking

As renown, the elimination of geographical discriminations in the use of payment systems in euro, as an obstacle to the full implementation of the SEPA system and, more generally, to the creation of the single payment market, is a key priority objective at European level.

In this regard, Article 9 of Regulation (EU) 2012/260 established that a payer making a credit transfer to a payee holding a payment account located within the EU shall not specify the Member State in which that payment account is located.

In addition, the new Regulation (EU) 2018/302 on addressing unjustified geo-blocking also enshrined in its Article 5 the same principle: a trader shall not, within the range of means of payments accepted by the trader, apply, for reasons related to a customer's nationality, place of residence or place of establishment, to the location of the payment account, the place of establishment of the payment service provider or the place of issue of the payment instrument within the EU, different conditions for a payment transaction.

In light of the above, if a company accepts a specific payment method (credit card, postal order, direct debit), it cannot refuse the payment to the extent it is ordered by an individual or carried out through an intermediary based in a specific EU Member State.


The ICA investigation against the Italian main telco operators

a) The companies’ defence

According to the companies, the possibility to pay by banking domiciliation with a foreign account was not allowed due to their participation in the SEDA system, an optional service with respect to the European SEPA payment system used by Italian banks. The unavailability of an IT system that would allow the conclusion of a contract or to change the payment method, in case the bank domiciliation has been made with a banking account opened with banks based in countries of the EU other than Italy, would represent an "entrepreneurial choice" whose rationale is not geographical but rather financial.

Accordingly, the failure to accept direct debit payment by foreign accounts would stem only from the choice of the companies to use the SEDA system. The national banking system is in fact able to receive payments from any foreign institution through SEPA. Nonetheless, the SEDA service would allow to obtain advantages in terms of security and fraud prevention, as well as of the management of the payment method by the customer. Therefore, the choice to join the SEDA service would not be made for the purpose of discriminating foreign customers not having an account with an Italian bank.

b) ICA’s assessment

According to the ICA, the possibility to choose the payment method with direct debit with banking account only opened with an Italian bank cannot be justified by the decision of the company to use the SEDA service, in light of the introduction of the SEPA system.

In this regard, it should be noted that the transition from the “RID” (the system of direct debits previously used in Italy) to SEPA has been made precisely to harmonize the systems at EU level and to guarantee in Italy a mechanism that generates payments with a mandate by the creditor and not by the debtor.

The SEPA provides, in fact, a common model among all the EU States based on the management of the mandates by the creditors (or the invoices) who should, therefore, manage the payments of the customers by liaising with the respective banks.

The SEDA protocol cannot justify the refusal to accept payment by non-Italian IBANs, since it is an optional and additional "service" provided to companies which prefer to not directly manage the payment ordered by their clients. As such, the choice to use the SEDA cannot amount to an exemption for the company which has not adopted specific internal procedures to comply with the EU legislation, thus preventing customers from paying through bank domiciliation with a foreign banking account. Indeed, the objective to ensure full interoperability in the system of payments at European level led to the introduction of the EU Regulation 2012/260 aiming at harmonizing the payment systems.

In conclusion, the ICA has considered the conduct consisting in not allowing customers the payment of services through bank domiciliation with a bank based in an EU country other than Italy as a breach of Article 9 of the Regulation (EU) n. 260/2012 and of Article 5 of Reg. 2018/302 on geo-blocking. On those grounds, the ICA fined for an “IBAN discrimination” conduct the undertakings concerned: a) Vodafone received a fine of € 800,000, b) Wind Tre also received a fine € 800,000 and c) Fastweb a fine of € 600,000.

It should be noted that TIM submitted commitments which were accepted by the ICA. Such commitments can represent a benchmark for those operators who still do not comply with those EU rules and are aiming to be fully compliant with the aforementioned provisions. More specifically, TIM committed to: i) implement internal systems that allow the acceptance of direct debit from banks based in EU countries other than Italy within 3 months from the acceptance of the commitments; ii) manage the transitional period through proposed domiciliation on credit cards; iii) inform customers about the new possibility of domiciliation also for banks based in other EU countries.

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