The Irish League of Credit Unions is in crisis following a High Court ruling yesterday in favour of the Competition Authority which leaves the league's main source of funding in danger.
Mr Justice Nicholas Kearns, in his judgment, said the league cannot refuse access to its savings protection scheme to member credit unions who are disaffiliated for sourcing insurance outside of the league.
The league has its own insurance company which member credit unions are obliged to use for life and savings protection insurance.
The cost of the insurance is significantly above market rates and includes an element of membership fee used to fund the league's activities.
One informed source said the ruling effectively removed the league's ability to enforce use of its insurance services. "How will you fund the league now?"
The High Court ruling is the first judgment in an abuse of dominance case and could have implications for representative bodies generally.
The credit union league is an umbrella organisation representing 532 credit unions who have 2.6 million members in the Republic and Northern Ireland. Member credit unions have assets of €9.58 billion.
Mr Justice Kearns said there were separate markets for the provision of credit union representation and the provision of savings protection. The Irish League of Credit Unions was dominant in both.
The tying of access to the savings protection scheme to membership of the league was an abuse of dominance.
The ruling could have implications for all representative bodies who have an effective monopoly on the provision of an economic service to a particular class of persons, such as members of a particular profession.
The ruling comes after an 11- day hearing earlier this year and costs are likely to be well in excess of €500,000.
Who will have to pay these costs will be ruled on in three weeks' time.
The league, in a short statement, said it would now review the judgment to assess its implications and would advise the movement of the outcome of this review.
No further comment was available.
The Competition Authority welcomed the judgment. Dr Paul Gorecki, director of the authority's monopolies division, said it took the case because it believed the league was abusing its dominant position by refusing to allow access to its savings protection scheme to non-affiliated credit unions.
"In our view this amounted to an abuse of its dominant position as the only provider of this type of savings protection." He said he believed the purpose of the league's behaviour was to protect its position as the dominant provider of credit union representation services.
The judge's decision is the first in an abuse of dominance case brought by the authority.
The judgment will provide guidance in the authority's operation of the 2002 Competition Act.
The ruling has implications for credit unions in the Republic and Northern Ireland.
There are 437 registered credit unions in the Republic, of which 428 are members of the league.
