NMa: Further Research Necessary into Competition in the Financial Sector

Further research is necessary into the degree of competition in the financial sector. This appears from the Financial Sector Monitor of the Netherlands Competition Authority (NMa). Mr Zalm, the Minister of Finance, will today receive the first copy of the "Monitor" from the Director-General of NMa, Mr Pieter Kalbfleisch, which summarises the research carried out by the Financial Sector Monitor.

The Financial Sector Monitor carries out economic research into the operation of the financial markets and analyses competition risks. At the NMa symposium "The State of Competition in the Financial Sector", various speakers will present their views on competition in the financial sector, under the chairmanship of Prof. Karel van Miert, former European Competition Commissioner. The symposium also marks the official launch of the Financial Sector Monitor, which was set up at the beginning of this year with the support of the Ministry of Finance.

The Monitor contains an overview of economic research which brings to light evidence that competition in the financial sector in the Netherlands is lagging behind in comparison to both other sectors in the Netherlands and other European countries. This conclusion does not apply to all market segments.

Specific attention is given in the Monitor to two important market segments: the payments market and the market for non-life insurance. The payments market in the Netherlands is characterised by a high degree of concentration and considerable barriers to entry, such as high switching costs for customers, which make it difficult for new entrants to win over customers from other banks. No evidence was found that the structure of the non-life insurance market as a whole obstructs competition. Exceptions to this, however, include, for instance, the markets for legal aid and export credit insurance. These markets are characterised by a moderate to high degree of concentration. In addition, the barriers to entry and switching are high, since very specific knowledge is required for entry into these markets.

NMa will present its view of competition in the financial sector annually by publishing the Monitor. In the NMa Agenda 2003 and the provisional NMa Agenda 2004, the financial sector is identified as one of the areas of attention which are given priority.

In publishing the Monitor, NMa does not adopt a formal position in relation to enforcement of the Competition Act. NMa's aim is to share knowledge and insights with all interested parties within and outside the financial sector. NMa invites interested parties to respond to the contents of the first publication of the Financial Sector Monitor.

De Monitor Financiële Sector (MFS)