Joan Burton (Dublin West, Labour)
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Question 1125: To ask the Minister for Enterprise, Trade and Employment his views on the lack of competition in the credit card market as highlighted in the Herfindahl Hirschmann Index, which showed that the market here was uncompetitive; and if he will make a statement on the matter. [2886/07]

Micheál Martin (Cork South Central, Fianna Fail)
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While I do not have any direct responsibility for this matter I understand that the question refers to a presentation given by the Consumer Director of the Financial Regulator to its Consumer Panel in November 2005. The presentation featured a table showing Herfindahl-Hirschman indices in key segments in the Banking and Insurance industries. The Herfindahl-Hirschman indices (HHI) are a measure of the size of different firms in relationship to their industry and are an indicator of the amount of competition among them. The Herfindahl-Hirschman indices are calculated by squaring the market share of each participant in a market and then summing the results. The higher the HH number, the more concentrated is market power. Increases in the index occur as the number of competitors in a market decreases and/or the disparity in size between firms increases.

I should firstly point out that the latest data in the table concerned relates to 2004. I agree that the concentration indices displayed in the table do show that the credit card market in Ireland is concentrated. However, the overall trend since 2000 shows that the market has become less concentrated and since the table was published a number of significant new entrants have also entered the Irish credit card market thereby further reducing concentration in the market-place. This trend is reflected in a further decrease in the HHI in 2005 (Annual Report of Financial Regulator 2005).

The Government firmly believes that a competitive credit card market benefits consumers through increased choice, innovative products, lower interest rates and charges and better service. Regulation of the financial services industry is, of course, primarily a matter for the Minister for Finance and the Financial Regulator.