In May 2023, Naps SA filed a complaint with Morocco’s Competition Council, accusing the Centre Monétique Interbancaire (CMI) of engaging in anti-competitive practices in the electronic payments sector. After a thorough review, the Competition Council deemed the complaint admissible.
In response, CMI and its nine shareholder banks have proposed commitments aimed at addressing competition concerns and enhancing the competitive landscape of electronic card payments, including TPE (Electronic Payment Terminals) and PEL (Electronic Payments).
“The CMI and its shareholder banks submitted proposals to the Competition Council to address concerns raised during the investigation and improve the competitive functioning of the card payment market,” the Council said in a statement on Friday.
After reviewing the commitments, the Council’s College concluded during its meeting on September 26, 2024, that the proposed measures were substantial, credible, and verifiable. The Council’s interim Rapporteur Général has published a summary of the case and the commitments, inviting interested third parties to submit their observations.
Under Moroccan competition law (Law 104.12), the Competition Council has the authority to accept commitments proposed by companies to address competitive concerns. These commitments aim to resolve practices potentially prohibited under articles 6, 7, and 8 of the law.
Structural commitments
CMI has committed to transferring all merchant contracts related to card systems (TPE and PEL) to payment institutions or other dedicated subsidiaries of banks, whether affiliated with CMI or not. CMI will also transfer contracts linked to its online payment gateway (E-commerce Gateway).
Additionally, CMI pledges to actively facilitate these transfers and ensure the economic viability, value, and competitiveness of these contracts during the transitional period, which will last for 12 months from the Council’s decision. Furthermore, CMI has agreed to refrain from soliciting new clients or signing new contracts related to card systems or its E-commerce Gateway services.
However, CMI is permitted to take necessary measures to manage and defend existing merchant contracts until they are transferred to payment institutions or bank subsidiaries.
Once restructured, CMI will serve as a technical platform for processing transactions for all payment institutions, offering fair, transparent, and non-discriminatory access to its services.
Behavioral and tariff commitments
In addition to structural reforms, CMI and its shareholder banks will implement a compliance program to align their operations with competition laws and immediately halt the practices that raised concerns.
The shareholder banks also commit to ensuring that their payment institutions or subsidiaries operate independently, both legally and economically. This will ensure the functional and financial autonomy of these entities, and banks will refrain from directly marketing the affiliation offers (TPE or PEL) of their payment institutions or acquisition subsidiaries.
Nevertheless, banks may promote acquisition activities within their networks without restricting clients’ right to choose their preferred acquirer.
Moreover, CMI and its partners agreed not to impose interchange fees (a portion of the acquisition commission paid by the acquirer to the cardholder’s bank) exceeding the cap set by Bank Al-Maghrib’s domestic interchange fee regulation. This revision is expected to significantly reduce merchant acquisition fees, thus promoting the growth of card payments.
Next steps and monitoring
The Competition Council has provided a transitional period for the gradual implementation of these commitments. A monitoring entity, jointly established by the Council and Bank Al-Maghrib, will oversee the execution of the agreed measures.
CMI and its shareholder banks have committed to providing the Competition Council with biannual reports for two years, detailing the implementation of structural and behavioral commitments.
The Competition Council will now conduct a market test by gathering feedback from third parties, including the government commissioner, within 30 days, ending on October 30, 2024. After reviewing the observations, the Council will issue a final decision, making the commitments binding for all parties and marking the closure of the case.
