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Charging for use of ATMs on Saturday by major banks

March 12/2003
Japan Fair Trade Commission

In Japan, there has been tendency that when some major bank raises service charges, other banks are most likely to follow on the heels of the forerunner one after another. The Fair Trade Commission (FTC) has been paying attention to banks' longstanding practice of being imitational conduct with each other and giving a caution to them when there found the coordination among banks in raising service charges.
The outset of UFJ Bank publication on 4 October 2002, announcing that customers would be charged for using Auto Teller Machines (ATMs) on Saturdays (effective 7 December 2002), was followed by Tokyo Mitsubishi Bank on 16 December 2002 (effective 15 February 2003); Mitsui Sumitomo Bank on 6 January 2003 (effective 1 March 2003); and Mizuho Bank being under consideration for the moment.
Considering that the forerunner,UFJ Bank now chairs the Japanese Bankers Association (JBA), the FTC questioned mainly the four major banks and then inspected the minutes of meeting both at the JBA and at commercial banks’ informal gatherings. The outcome of screening was as follows:

1. Situation

(1) Summary of markup situation of the four banks
a. UFJ Bank
Service charges: \105. UFJ Bank initiated a charge plan in the late 2001 and decided to start charging them in April 2002. But it postponed it due to the thorough management of system operations. It decided to start charging in June 2002 again and then started charging on 7 December 2002
b. Tokyo Mitsubishi Bank
Service Charges: \105. Tokyo Mitsubishi Bank initiated a charge plan in April 2002, decided to start charging them in August 2002 and then started charging on 15 February 2003
c. Mitsui Sumitomo Bank
Service Charges: \105. Mitsui Sumitomo Bank initiated a charge plan in April 2002, decided to start charging them in July 2002 and then started charging on 1 March 2003
d. Mizuho Bank
Service Charges: \105. Mizuho Bank initiated a charge plan before April 2002, decided to start charging them by around July 2002 and then has been under consideration for the present

(2) Rationalization in charging for use of ATMs on Saturdays
Each bank insisted on its unique sales strategy in independently charging customers for using ATMs on Saturdays, and unanimously denied any nexus with each other. First, of particular importance is raising the bottom line in ATM business as a part of profit-making process. In addition,these four banks strongly insisted that the charge was based on their own sales strategy that contrives to induce their existing customers to their special programs with preferential treatments (no charge for using ATMs and discounted handling fees for cash transfer) to those who have established certain business records. The special programs include “All-One” (UFJ), “Main Bank” (Tokyo Mitsubishi), “One's Plus” (Mitsui Sumitomo), and “Value Program” (Mizuho).
Some of these banks mentioned as background that some regional banks had already started pay-per-use service for using ATMs on Saturdays. UFJ, in the course of considering the charge on Saturdays, asked by telephone the regional banks which had already adopted such charges, whether or not to receive complaints from customers.

(3) The timing of charges
As with UFJ, the rationale behind pay service was a five-day work week at school commencing in April 2002,exceeding 1 million bank accounts for those who were entitled to receive preferential treatments, and the timing of system integration following corporate merger. Three other banks put forward such similar reasons as those of UFJ. One of the three banks had guessed the plan of UFJ in April 2002, but it strongly insisted that such guess had no concrete influence on its own decision.

(4) The rationale behind \105
The rationale behind \105 was not based on a cost-based analysis but in conformity to fees for using on Sundays, or other time slots on Saturdays. Some banks adopted a cost-based analysis, and others did not. There appeared considerable variations in profit forecast among them.

(5) Information exchange among the trade associations
There was no evidence that information was exchanged regarding fee plans for using ATMs at the meetings of the JBA and the Gatherings of Commercial Banks in two years.

(6) Advance notice of pay service for using ATMs
It has been quite customary that a bank participating in ATM networks would send written advance notice to other participating banks before announcing a fee change to customers. The concerned parties maintain that this business practice is for informing other banks of the fee raise in case complaints about a fee raise will be directed, however, very few customer service centers have been set up to handle complaints. Other banks, as a matter of course, expected a fee increase for using ATMs on Saturdays. A cardholder will have to pay \105 for using a bank's own installed ATMs, on the contrast, \210 for using other banks' ATMs.

2. Interpretations on the situation in light of the Antimonopoly Act

(1) Simultaneous fee increases by these four banks
Four banks stressed the need to generate more earnings due to costs incurred by operating ATMs on Saturdays. There is no fee for a cardholder to use ATMs on Saturdays that were installed by some regional banks such as Hokkaido Bank or Hokuriku Bank. On the contrary, additional fees applied as a result of fees charged for using other banks' ATMs. It puts forth a wide diversity of charging methods which leave sufficient room to improve financial positions. As long as the FTC conducted hearings from these four banks, it was not necessarily of benefit to customers while there was a slight variance in preferential treatment to their respective customers.

(2) Concerns raised in compliance with the Antimonopoly Act
A fee raise may place customers at a significant disadvantage while interest rates are edging down the bottom these days.
It may definitely raise potential antitrust issues if major banks may simultaneously and cooperatively charge customers a fee for the use of their ATMs whereas customers are now able to use them at no cost. It would be deemed unlawful if such a simultaneous fee increase might impede fair transactions in bank deposit services.
However, no evidence was obtained through FTC's hearings this time that mutual understanding was reached or tacit discussion was made regarding a fee for using ATMs. Banks have normally been issuing advance notice to other banks who are participating in the ATM networks before announcing a fee change for using ATMs to customers, but it is hardly regarded as a prerequisite to a fee raise. Therefore, the FTC requested these four banks and the JBA not to notice a fee change to other banks before announcing it to customers.

*Every announcement is tentative translation. Please refer to the original text written in Japanese.

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