UBS does not have to fulfill competition requirements due to CS takeover
Published: Wednesday, Jun 19th 2024, 13:30
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UBS does not have to comply with any competition law requirements in connection with the takeover of Credit Suisse. The Swiss Financial Market Supervisory Authority Finma has come to the conclusion that the merger of the two big banks will not eliminate effective competition in any market segment. It has therefore waived any conditions.
UBS was able to strengthen its market position in certain sub-segments, Finma admitted in a press release on Wednesday. However, the legal requirements of merger control for an intervention were not met. The control procedure was therefore concluded "without conditions, requirements or further examinations".
Early approval
As part of the CS emergency takeover by UBS orchestrated by the Swiss authorities on March 19, 2023, FINMA had already approved the merger of the two big banks ahead of schedule in accordance with antitrust law. This measure was taken in the interests of creditor protection, it emphasized on Wednesday. This was necessary at the time in order to avert greater damage to the Swiss financial center and the international financial markets.
The Competition Commission (ComCo), which is normally responsible for assessing antitrust law, had been informed that FINMA was claiming this responsibility. However, FINMA had been in "close contact" with the Competition Commission. The two authorities subsequently carried out extensive market investigations together and evaluated numerous comments from competitors, associations and specific customers.
Competition Commission suggests in-depth review
In a comprehensive report by the ComCo last fall, which Finma published on Wednesday, the competition watchdogs also see no need for UBS to impose conditions such as spin-offs or partial sales. However, they did note an increase in UBS's market power and a reduction in competition in submarkets. Accordingly, the ComCo suggested in its statement that Finma carry out an in-depth investigation.
The ComCo report identifies certain competition problems in the area of asset management: The merged bank holds a significant position in the business with institutional clients as well as in the fund business. Nevertheless, the conditions for competitors to enter the market or expand their services are good, the report concludes, stating that there is no market dominance.
The situation is similar in business with corporate clients. Following the merger with CS, UBS now has a market share of more than a third in some areas. In the sub-market for large corporate clients in particular, there are currently no fully-fledged alternatives available, the ComCo noted. Nevertheless, "a certain initial competition" exists, even if not to a desirable extent.
The ComCo reached its conclusions following extensive market investigations: Surveys were conducted with 106 banks and other financial companies, 56 associations - including Economiesuisse and the trade association - and 60 important bank customers. Other experts were also consulted.
Finma emphasizes that the extensive market surveys and the detailed opinion of the Competition Commission provided a sufficient basis for a final decision.
Weko can take over
In recent weeks, UBS has been accused in various media of exploiting its market position, particularly in business with corporate clients: Clients reported that the big bank had significantly worsened conditions in some cases. However, UBS Switzerland boss Sabine Keller-Busse recently pointed out in an NZZ interview that UBS had to reprice unprofitable CS client relationships and that the interest rate situation had changed at the same time.
In any case, the Competition Commission is likely to continue to keep an eye on the relevant markets in future, as its Director Patrick Ducrey confirmed to the news agency AWP on Wednesday. Individuals or companies could approach the Competition Commission or the price watchdog if they feel they have been taken advantage of. However, the Competition Commission does not currently see any need for action: it has not received any complaints or appeals.
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