Irish Competition Authority Decisions

1. Notification was made by Regional Technical College Athlone on 29 May 1996 with a request for a certificate under Section 4(4) of the Competition Act, 1991 or, in the event of a refusal by the Competition Authority to issue a certificate, a licence under Section 4(2), in respect of a licence agreement between the Regional Technical College Athlone (Athlone RTC), College Support and Services Limited (College Support) and the Governor and Company of the Bank of Ireland (Bank of Ireland).

2. The notification concerns a licence agreement under which Athlone RTC grants the sole and exclusive concession to the Bank of Ireland to carry on bank sub-office services at the college campus and provides premises on the college campus for these purposes.

3. Athlone RTC was established in 1970 and is now an independent statutory body operating under the Colleges Act 1992. The College provides third level education which is largely funded by the State but it also receives income from student and research fees. The College has over 3,000 students and over 300 staff. The Bank of Ireland is the second largest commercial bank in Ireland with a network of about 290 branches within the State. College Support was established as a development company to the College with its principal object being the support of the College including the provision of ancillary services and facilities.

(c) The Notified Arrangements

4. The notified agreement was made on 20 May 1996 for a period of nine years from 1 October 1994 and with an exclusive first option to renew it for a further nine year period. Under the agreement Athlone RTC agrees, in consideration of the payment by the Bank of Ireland of a substantial lump sum to College Support, to grant to the Bank of Ireland the sole and exclusive concession to establish and maintain a bank sub-office for the conduct of normal bank sub-office services. The services may also include the provision of an ATM facility. Athlone RTC also agrees to allow the Bank of Ireland to use and occupy premises in the college solely for such purposes and to provide maintenance and other services for which a maintenance charge will be payable by the Bank of Ireland. The agreement provides that “ the relationship of landlord and tenant shall not be deemed to exist ....by virtue of this licence which is merely a licence and is not a lease or contract of tenancy of any description.” The licence agreement is subject to the licensee making a successful notification to the Competition Authority and the retention by the college of the lump sum is subject to the issue of a certificate by the Authority. The agreement also contains the following clauses:

2. The College shall for the duration of the exercise of this Licence hereby granted

(d) Subject to the requirements of the Data Protection Act, allow and grant to the Bank of Ireland, the exclusive right to recruit accounts of all students on the Campus during the nine year term of this agreement.

(e) Arrange for the mandating of all ESF or other similar grants to the Licensee over the full course of the Licence term hereby granted and the current system of direct payment of ESF Grants to Students Bank Accounts by Electronic Funds Transmission will continue.

(f) Not permit any competitor of the Licensee whether a Bank, Building Society or other Financial or deposit taking institution to operate or conduct a representative office, facility or presence in the College or its Campus over the course of the Licence term hereby granted by the College to the Licensee.

5. Under this scheme the Vocational Education Committees award grants to eligible candidates at approved institutions in Ireland in respect of attendance at approved third level courses. ESF money is received by the Athlone RTC on a monthly basis from the Department of Education. The money is banked by the college with the Bank of Ireland until payment to students is due . An electronic file is sent to the Bank of Ireland giving details of all students eligible for Maintenance Grants and the amount being paid to them each month. The Bank of Ireland then credits the students' accounts with the funds. The Bank of Ireland credits the accounts whether they are with AIB, Ulster, Trustee Savings banks or Bank of Ireland. It is a matter for the students to nominate their own bank and to receive the ESF funding which is administered and distributed by Bank of Ireland. There is no obligation on the students to maintain an account with the Bank of Ireland.

6. In its submission Athlone RTC stated that it was an undertaking engaged for gain in the provision of third level education and research for which it receives substantial fees. They argued that clause 2(d) of the licensing agreement dated 20 May, 1996 did not prevent students from having their accounts with other banks. There were a number of other financial institutions within the town of Athlone, including two branches of the Bank of Ireland (one with a pass machine), and a branch of each of the AIB , Ulster and National Irish banks. Five of the main building societies also have branches in the town, all within a one mile radius of Athlone RTC. None of the students or staff reside within the college campus and they all have access to the branches of the competing financial institutions. However the concession to the Bank of Ireland meant other financial institutions were not able to canvas for business on the college campus during the term of the agreement. From a commercial point of view it would be impossible for the Athlone RTC to attract one of the major banks on to its campus in circumstances where that Bank was being asked to invest heavily while at the same time the college was allowing other banks to open accounts for business on campus.

In relation to clause 2(e), for reasons of administration, Athlone RTC pay all of the ESF student grants directly to students through bank accounts held at Bank of Ireland only. This system had been in operation in Athlone RTC for a long number of years and was a term of the agreement between Athlone RTC and Bank of Ireland that this system of payment of ESF grants by electronic funds transmission would continue. This was a standard agreement which was necessary for the maintenance of a proper relationship with regard to the operation of the banking concession and the occupation of the premises. Clause 2(e) fell into the same category as exclusive user clauses in the letting of premises in a shopping centre etc and as such did not offend against Section 4(1) of the Competition Act, 1991.

In relation to clause 2(f) the notifying party submitted that this clause did not offend against Section 4(1) of the Act by virtue of the fact that all of the major banks and building societies maintained offices in Athlone town which was only a short distance from the Athlone RTC and as such had ample opportunity to compete for the business of the staff and students of the college. Furthermore this clause was necessary for the maintenance of a proper relationship with regard to the operation of the banking concession and occupation of the premises by Bank of Ireland. For commercial reasons it would not be possible for Athlone RTC to secure the presence of a major bank on its property without granting such a concession to the Bank of Ireland.

Athlone RTC also referred to a number of previous Authority decisions, which concerned the provision of exclusive banking facilities on college campuses, arguing that on the basis of these decisions the notified agreement does not offend against Section 4(1) of the Competition Act. These previous decisions which were all made on 10 March 1994 related to Dublin City University/AIB Bank plc (Decision No. 293), University College Dublin/Bank of Ireland (Decision No. 288), University of Limerick/Bank of Ireland (Decision No. 289) and University College Galway/Bank of Ireland (Decision No. 290).

7. Section 4(1)of the Competition Act, 1991 refers to agreements between undertakings and Section 3(1) defines an undertaking as “ a person being an individual, a body corporate or an unincorporated body of persons engaged for gain in the production, supply or distribution of goods or the provision of a service.” According to the judgment of the Supreme Court in the VHI case, as delivered by Finlay C. J, the words “for gain” connote merely an activity carried on or a service supplied, as in this case, which is done in return for a charge or payment. Athlone RTC is engaged in the provision of the services of third level education and research for which it receives revenue by way of fees. In this instance it is providing an exclusive facility on its property to be used for commercial purposes in return for a substantial payment. It is therefore regarded in this instance as an undertaking engaged for gain in the provision of a service. Bank of Ireland is an undertaking engaged for gain in the provision of banking and other financial services. College Support was established as a commercial arm of Athlone RTC to provide support and ancillary services to the RTC and is an undertaking. The notified agreement is therefore an agreement between undertakings. The agreement has effect within the State.

8. The notified agreement concerns the grant of an exclusive licence to the Bank of Ireland to operate a sub branch bank on the Athlone RTC campus with provisions to regulate the operation of the concession and the occupation of the premises. The Authority has in a number of previous decisions which are detailed in para. 6 above, decided that the grant of such exclusive licences, confined to the campus of a college, does not offend against Section 4(1). In this instance while Bank of Ireland is the only bank situated within the college campus, all of the Bank of Ireland’s competitors in the retail banking sector and all of the major building societies have branches in Athlone town immediately adjacent to the campus and students are not prevented from using these other facilities. There is therefore a wide choice of banks within a one mile radius of the campus which students can nominate in order to receive their ESF grants. Under the agreement the Bank of Ireland has the exclusive right to recruit accounts of all students on campus during the nine year term of the agreement. This provision, presumably, also prevents other financial institutions from advertising or promoting their own services on the campus but not in the town of Athlone. Having regard to the location of these other banks and building societies, the Authority does not regard the exclusive right of the Bank of Ireland to recruit the accounts of all students on the Athlone RTC campus as having any effect on competition. The Authority therefore considers that that the notified agreement between the Regional Technical College Athlone, College Support and Services Ltd and the Governor and Company of the Bank of Ireland does not offend against Section 4(1) of the Competition Act, 1991.

9 The Competition Authority has issued the following certificate

The Competition Authority certifies that in its opinion, on the basis of the facts in its possession, the licence agreement dated 20 May 1996 between the Regional Technical College Athlone, College Support and Services Ltd and the Governor and Company of the Bank of Ireland in relation to a banking concession at the Regional Technical College Athlone notified under Section 7 on 29 May 1996 (notification no. CA/20/96), does not offend against Section 4(1) of the Competition Act, 1991.

For the Competition Authority

Prof. Patrick McNutt

Chairperson

12 December 1996.