A former member of the Competition Authority has described as inconsistent and contradictory" the authority's claim that the Irish League of Credit Unions (ILCU) has engaged in anti-competitive practices and abused its alleged dominant position.
In a detailed and lengthy economic report presented yesterday to Mr Justice Kearns, Mr Patrick Massey, now a private consultant, analysed the authority's claim against the ILCU.
He said that economists consider the object of competition policy "is about protecting consumers, not competitors", and he concluded that the authority had failed to show how the ILCU had harmed consumers.
Yesterday was the third day of the hearing of proceedings by the authority against the ILCU in which it is seeking a number of orders and declarations. The action is before Mr Justice Kearns and is expected to last a number of weeks.
The authority claims that the ILCU has breached the Competition Act 2002 by requiring credit unions to be members of the league before they may avail of its Savings Protection Scheme (SPS). This is worth up to €90 million and provides maximum compensation of some €12,700 to individual members, where a credit union experiences financial difficulties.
By requiring members to take out Loan Protection and Life Savings cover (LPLS) with ECCU Life Assurance Company Ltd, a company controlled by the ILCU, the authority further claims the ILCU is abusing its alleged dominant position in the alleged market for credit union representation.
It is seeking injunctions requiring the ILCU to amend its rules to permit non-ILCU members to participate in the SPS on the same terms as ILCU members, and restraining the disaffiliation of any credit union in circumstances where disaffiliation would mean loss of access to the SPS.
The court has heard the ILCU has 540 member unions, some 2.6 million members and assets of more than €9.58 billion. The authority initiated proceedings after the ILCU threatened last year to disaffiliated several member unions when those unions refused to take out LPLS cover with the ECCU. The credit unions in question had claimed they could obtain LPLS cover at cheaper rates than available from the ECCU, which company's charges included a levy to fund the ILCU.
Some of those unions have become members of the Credit Union Development Alliance (CUDA), which was formed in 2002. It now has 20 member unions, some 350,000 individual members and assets of €1.2 million.
Yesterday, in his report, Mr Massey said the evidence does not support the authority's claims against the ILCU of abuse of a dominant position or anti-competitive practices.
The authority claimed the ILCU had a dominant position in the market for credit union representation, he said. He believed the claim that there was a distinct market in the State for credit union representation was wrong.
The evidence also indicated the ILCU does not enjoy a dominant position, the report stated. The ILCU had been forced to revise its pricing strategy as a result of the decision by a number of member credit unions to purchase LPLS cover other than from ECCU. The hearing resumes on Tuesday.
