The Washington State banking commissioner is protesting BankAmerica Corp.'s new ATM fees for noncustomers, calling them illegal and a form of predatory pricing.
In fact, "the case can be made that surcharges are one step worse than predatory pricing," wrote John L. Bley, director of Washington's Department of Financial Institutions, in a letter last week to the Office of the Comptroller of the Currency.
BankAmerica's Washington subsidiary, Seafirst Corp., disputed the allegations.
"Seafirst customers should not have to subsidize the use of our ATMs by noncustomers," said Sheri Pollack, a Seafirst spokeswoman.
Mr. Bley asserted in his letter that the fees, which were instituted last month, are unfair because BankAmerica can use its dominant market share of ATMs in the state to coerce noncustomers into becoming customers. Such a scenario is anticompetitive, he wrote, particularly for the smaller banks that don't have extensive ATM networks.
Predatory pricing typically refers to an instance where a large company forces a smaller competitor out of business by temporarily charging prices below cost. The smaller company cannot match the low prices and is forced to leave the market.
In this instance, Mr. Bley said that BankAmerica is achieving the same effect with the $1.50 per transaction fee because customers will likely flock to the bank to avoid the charge, boosting profits in the process.
"It's the anticompetitive equivalent of having your cake and eating it too," he wrote.
Though BankAmerica was the first major West Coast bank to impose fees for noncustomers last month, many of the country's largest banks have made similar moves after the ATM network companies lifted a ban on such fees last April. In fact, eight of the country's 10 largest banks levy fees in at least some of their markets.
The Office of the Comptroller of the Currency, the agency that regulates federal banks, typically does not involve itself in pricing matters, said Edward Alwood, a spokesman.
"Our interest would have to do with compliance with disclosure regulations," he said. "Historically, we leave pricing issues up to the free market."
Antitrust lawyers said the charges sounded dubious.
"If somebody is not selling a product at below cost, then it's not predatory pricing - it's as simple as that," said Edward F. Glynn Jr., a lawyer with Venable, Baetjer, Howard, Civiletti in Washington D.C. "There might be something else going on here, but it sure as heck isn't predatory pricing."
Michael Greenspan, another Washington D.C.-based lawyer, with Thompson Coburn, said he sees no evidence that the smaller banks are truly suffering from any competitive disadvantage under the new fees, which typically range from 75 cents to $1.50. Generally speaking, customers appear indifferent toward them, he said.
"Customers have been willing by-and-large to pay these fees, and if that remains true then there is nothing to this complaint," Mr. Greenspan said.
The Washington Bankers Association has not taken a position on the issue in part because it has no clear consensus among its members. While some small banks oppose the fees by the larger banks, others acknowledge that they have instituted them.
Seafirst leads the state with the most ATMs, 888, followed by U.S. Bancorp with 445, and KeyCorp with 400. KeyCorp also imposed a fee for noncustomers last month.