On 30 November 2023, we decided that 3 firms offering international money remittance services had breached competition law.
We found that these 3 money transfer firms coordinated on certain exchange rates and certain transaction fees between 18 February 2017 and 31 May 2017 and so fixed prices charged to consumers in Glasgow looking to send money to Pakistan.
We fined the firms a combined total of over £150,000.
The below case study summarises the FCA’s decision and provides some key lessons aimed at helping firms and relevant employees to comply with competition law.
Read a non-confidential version of our decision in full (PDF)[1]
Case study: International money remittance
Consumers and businesses can transfer money abroad using international money remittance. Consumers often use this service to transfer money to family and friends who live overseas.
During the period relevant to our decision, the 3 firms were involved in providing international money remittance to consumers in Glasgow who wanted to transfer money to Pakistan.
The money transfer firms
The FCA decided the following money transfer firms breached competition law:
- Dollar East (International Travel & Money Transfer) Ltd
- Hafiz Bros Travel & Money Transfer Limited
- LCC Trans-Sending Limited (including its parent company, Small World Financial Services Group Limited), trading as Small World
What happened
On 15 February 2017, Small World opened its first and only branch in Glasgow. Before this, Small World had operated in Glasgow through a network of money transfer agents only, many located near to Small World’s new directly managed branch.
Several Glasgow-based money transfer agents active in providing UK to Pakistan remittance services had formed a group called the ‘Glasgow Money Transfer Association’ or ‘GMTA’. Both Dollar East and Hafiz Bros were members of the GMTA and individuals working at Dollar East and Hafiz Bros were part of a WhatsApp group with other GMTA members which was created in January 2017.
Soon after Small World’s Glasgow branch opened, certain GMTA agents applied pressure on Small World to change its pricing at the new branch.
They thought Small World’s Glasgow branch was offering customers better prices (in the form of better exchange rates and lower transaction fees) than GMTA members were offering their customers for transferring money to Pakistan. Certain GMTA members threatened to boycott Small World (that is, stop distributing its remittance services in their capacity as money transfer agents) if Small World’s Glasgow branch continued its pricing policy.
After meeting certain GMTA members, certain Small World employees agreed to join the GMTA’s WhatsApp group. This was to learn of and offer its Glasgow customers a UK to Pakistan exchange rate that was circulated within the WhatsApp group by Hafiz Bros and applied by other GMTA members such as Dollar East.
Small World also agreed, with certain exceptions, to charge a £5 fee at its Glasgow branch for remittances to Pakistan. This was in line with the £5 fee that other GMTA members, such as Dollar East, had agreed to charge their customers.
On 31 May 2017, Small World’s employees left the GMTA WhatsApp group.
How this broke the law
Competing firms should not discuss or agree the prices that they are going to charge customers: they must determine their commercial strategies independently.
Dollar East and Small World’s Glasgow branch could have, and should have, competed against each other on price for UK to Pakistan remittance services. However, between 18 February 2017 and 31 May 2017 they instead coordinated on their pricing practices through the GMTA. This anti-competitive conduct broke the law.
During the relevant period Hafiz Bros did not offer remittance services directly to consumers and was therefore not in direct competition with either Dollar East or Small World’s Glasgow branch. However, because of its activities within the GMTA, we found that Hafiz Bros had also broken the law by facilitating the illegal anti-competitive conduct.
Our decision relates only to international money remittance between the UK and Pakistan offered to consumers from physical stores in Glasgow operated by Dollar East and Small World. Any online services operated by the money transfer firms, or services to countries other than Pakistan, were not considered to have been subject to the anti-competitive conduct.
FCA action
As a result of the decision, we fined Dollar East £3,600, Hafiz Bros £11,200, and Small World £139,500.
We also wrote to other money transfer firms in Glasgow to remind them of their obligations under competition law.
Key lessons from this case
- Firms must decide their prices independently of each other. Ensure that any conversations with competing firms do not stray into areas that could break the law, such as discussing the prices that you are offering or intend to offer customers.
- Be careful when communicating with your competitors. This includes where there is a legitimate trading relationship in place between you and a competitor which may sometimes require communication.
- Avoid being in situations (such as joining a WhatsApp group) which might place you in regular contact with competitors and where your respective pricing or commercial strategies might be discussed.
- Difficult market conditions or new entry by a firm offering lower prices than established firms is no excuse for colluding to agree commercial strategies and so break the law.
- Competition law applies to all firms regardless of size or location.
- A firm can infringe competition law by helping other firms to engage in anti-competitive conduct with each other, even if it is not itself in the relevant market.
What you can do
Learn to recognise the kinds of behaviour that are illegal.
For competition law, a good place to start is the Competition and Markets Authority’s (CMA):
- introductory competition law guides[3]
- video on information you shouldn’t share with other businesses[4]
- other short videos on competition law[5]
Regulated firms must notify us of your own actual and possible contraventions of competition law under Principle 11 of the Principles for Businesses[6] and rules in the FCA’s Supervision manual[7].
Under competition law, firms that self-report certain anti-competitive conduct to the CMA may benefit from lenient treatment, particularly by being the first to come forward.
