The High Court has upheld a claim by the Competition Authority that the Irish League of Credit Unions (ILCU) has unjustifiably abused its dominant position in the markets for credit union representation and savings protection.
Mr Justice Kearns held that certain rules of the ILCU are anti-competitive and that the League breached both provisions of the Competition Act 2002 and of the EU Treaty.
The judge was referring to rules under which the ILCU had proposed last year to disaffiliate or expel individual credit unions who sought Loan Protection and Life Savings Insurance (LP/LS) other than through the ECCU Life Assurance Company Ltd, a company controlled by the ILCU.
Credit unions who did not take out LP/LS cover with ECCU consequently faced loss of access to the League's Savings Protection Scheme (SPS).
The SPS is worth up to €90 million and provides maximum compensation of some €12,700 to individual members where a credit union experiences financial difficulties.
The ILCU SPS is the only such scheme in the State. The requirement for a SPS for credit unions was voluntary until the Credit Union Act 1997 provided that all credit unions formed from August 1st 2001 must participate in an SPS.
However, the judge said, while there was no statutory obligation on credit unions formed before August 1st, 2001 to participate in a SPS, it was accepted it was extremely important that they do so.
Participation in such a scheme created consumer confidence in a credit union and provided reassurance for savers and depositors.
Mr Justice Kearns held that ILCU breached the Competition Act 2002 and Article 82 of the EU Treaty in tying access to its SPS to membership of the League on the one hand and also in its refusal to supply the SPS on an open non-discriminatory basis.
He found the tying-in credit unions was "pernicious" and enabled ILCU, if not to eliminate the breakaway credit union representative body CUDA in the short term, to "seriously weaken" competition in the market for credit union representation services and threaten foreclosure of that market.