The General Court has dismissed MasterCard’s appeal against the European Commission’s decision of December 2007 prohibiting its cross border EEA multilateral interchange fee (MIF) on consumer credit and debit cards1.
The Commission’s investigation into MasterCard’s MIF was prompted by complaints from retailer groups Eurocommerce and the British Retail Consortium. The Commission found that MasterCard’s MIF restricted competition under Article 101(1) by inflating the cost of card acceptance for merchants. Further, the Commission found that, absent the MIF, merchants would be able to exert greater competitive pressure on the costs they are charged for the use of payment cards.
MasterCard argued that, absent the MIF, issuing banks would need to reduce their MasterCard card issuing businesses or reduce benefits to cardholders, causing cardholders to favour other forms of payment.
The Commission rejected these arguments, concluding that the MIF was not objectively necessary for the functioning of the MasterCard payment system and did not contribute to technical or economic progress. As such, the Commission found that the MIF did not meet the exemption criteria under Article 101(3).
In addition, the Commission concluded that despite MasterCard’s IPO in 2006, the MasterCard payment organisation constituted an association of undertakings under Article 101, a point also contested by MasterCard.
Accordingly, in its decision of December 2007, the Commission ordered MasterCard to cease applying the MIF. Following a period of wrangling between the Commission and MasterCard, in April 2009, MasterCard gave undertakings to reduce its cross border MIF for credit cards to 0.3% and for debit cards to 0.2% (weighted average). The Commission accepted these undertakings pending the outcome of MasterCard’s appeal to the General Court.
In a judgment handed down on 24 May 2012, the General Court has upheld the Commission’s decision on all points. However, MasterCard has already announced its intention to appeal the ruling2. MasterCard’s undertakings given in April 2009 expired upon the issue of the General Court’s judgment. It remains to be seen whether the Commission will now require MasterCard to cease using this MIF or whether it will accept a further undertaking from MasterCard to cap the MIF pending the outcome of the appeal to the Court of Justice.
In its Green Paper on Payments issued in January 2012, the Commission stated that it was considering imposing regulation on MIFs3. In addition, the Commission is investigating Visa Europe’s use of MIFs. Its case against Visa Europe relates to the MIF applicable to cross border transactions within the EEA and domestic transactions in each EEA country where MIFs are either set directly by Visa Europe or where the Visa cross border MIFs would apply by default. As of December 2010, Visa offered to cap its debit MIF at 0.2% (weighted average). This undertaking will remain in place until December 2014. The Commission is continuing its investigation in relation to Visa’s credit and deferred debit card MIFs. In addition, given the General Court’s endorsement of the Commission’s approach, the UK’s Office of Fair Trading is likely to recommence its investigations into national MIFs of both MasterCard and Visa; these cases had been on hold pending the General Court’s judgment.