Credit Card Franchise Services (Hansard, 23 July 1987)

§ Sir William Clark
asked the Chancellor of the Duchy of Lancaster what account was taken, in deciding to refer credit card franchise services to the Monopolies and Mergers Commission, of the time taken by, and the results of, the earlier and similar reference.

§ Mr. Maude
The Director General of Fair Trading made the monopoly reference, which covers services to cardholders as well as franchise services to traders, as a direct result of his monitoring of the market following the Monopolies and Mergers Commission's 1980 report. In that report the Commission recommended that the Director General should keep the market under review, and should consider whether to make a further reference. The Director General took fully into account all the considerations set out by the Commission in its report.

§ Sir William Clark
asked the Chancellor of the Duchy of Lancaster if he will include within the terms of reference of the recent reference of credit card franchise services to the Monopolies and Mergers Commission consideration of all credit card and storecard services.

§ Mr. Maude
The terms of a monopoly reference made by the Director General of Fair Trading under the provisions of the Fair Trading Act 1973 can only be varied by the Director General. The Director General has made it clear that he gave careful consideration to the question of whether to include storecard services in the reference. I understand that the Director General concluded that the Commission should focus on credit cards, which may be used in a wide variety of outlets.

§ Sir William Clark
asked the Chancellor of the Duchy of Lancaster if he will list the considerations which led to the reference to the Monopolies and Mergers Commission by the Director General of Fair Trading on 27 May of credit card franchise services.

§ Mr. Maude
I understand that the Director General of Fair Trading considered that in the context of the substantial growth of widely issued cards such as Barclaycard and Access the following factors, among others, were important:

(i) the profitability of banks issuing credit cards appears to be high;

(ii) the monopoly position of the established banks found by the Commission does not appear to have been seriously challenged;

(iii) the rates charged to cardholders by Barclaycard and by the Access banks appear to have remained high in relation to the level of and movements in bank base rates.