The High Court has reserved judgment on a claim by the Competition Authority that the Irish League of Credit Unions (ILCU) has engaged in anti-competitive practices and abused its alleged dominant position in the market for credit union representation.
The 12-day hearing before Mr Justice Kearns concluded yesterday and the judge said he would reserve his decision which will have significant implications for the operation of credit unions. Because of the nature of the issues involved, the judge indicated the decision would take some time.
The Authority has argued that the ILCU has breached the Competition Act 2002 by requiring credit unions to be members of the league before they avail of its Savings Protection Scheme (SPS), worth up to €90 million, which 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 with ECCU Life Assurance, a company controlled by the ILCU, the league was abusing its alleged dominant position in the alleged market for credit union representation, the Authority has claimed.
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 scheme.
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 disaffiliate several member unions when those unions refused to take out loan protection and life savings cover with ECCU. The credit unions in question had claimed they could obtain such cover at cheaper rates than those available from ECCU, whose charges included a levy to fund the ILCU.
Some of those unions have since 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 about €1.2 billion.
The ILCU has denied there is a market for credit union representation or, if there is, that it has a dominant position in such a market or has abused its position there.
It has argued that member credit unions resolved in 1976 to purchase insurance from the ECCU. The commission charged on the sale of ECCU products provided the ILCU with a primary source of income to fund its activities, including the operation of the savings protection scheme. The pricing of ECCU products involved an element of community rating.
In requiring member unions to take out cover with ECCU, the league said it wished to provide insurance on more attractive terms to all of its member unions. Without that requirement, more attractive credit unions (by reason of their membership, age and work profile) would be cherry-picked by insurers, leaving the remaining unions vulnerable to significantly higher premium rates, contrary to the operating philosophy of the credit union movement.
The ILCU has denied that its refusal to provide access to its savings protection scheme to non-member unions is an abuse of its alleged dominant position. It has also argued that a new credit union is free to provide its own SPS or to join another credit union organisation, such as CUDA, which was likewise free to provide a SPS.
