In July 2011 the Administrative Court of Lazio annulled the Competition Authority's decision against MasterCard's domestic interchange fees.
In November 2010 the authority ruled that MasterCard's domestic interchange fees violated EU competition law. MasterCard appealed against the decision, arguing that Article 101 of the Treaty on the Functioning of the European Union did not apply to its interchange fees. MasterCard's position was as follows:
- MasterCard is not an association of banks. After its initial public offering in 2006, it became a public company, which sets its interchange fees autonomously and independently of any bank. Thus, MasterCard is not an association of undertakings and Article 101 does not apply.
- There is no restriction of competition because MasterCard's setting of interchange fees is objectively necessary for the functioning of its card scheme. Thus, even if MasterCard were an association of undertakings, Article 101 would still not apply.
- MasterCard sets its interchange fees in accordance with issuers' costs. This is the methodology mandated by the authority itself until recently. No alternative methodology is solid enough. Evidence showed that MasterCard's interchange fees were in line with issuers' costs.
MasterCard also asked the court to annul the authority's decision on procedural grounds, as during the proceedings MasterCard had offered undertakings to the authority, which were unlawfully rejected.
The court upheld MasterCard's appeal and annulled the authority's decision on the grounds that it had unlawfully rejected the undertakings offered. The court ruled that MasterCard should be allowed to have its undertakings re-evaluated; if they are accepted, the case should be closed with no finding of infringement.
The court also annulled the decision with respect to eight acquiring banks, which were parties to the authority's proceedings.
This is the first case in which the court, following the precedent set by the European Court of Justice in Alrosa,(1) has limited the authority's broad discretion in rejecting undertakings and has annulled one of the authority's decisions solely on the basis that the authority unlawfully rejected the undertakings offered by the parties.
In reaching its conclusions, theAdministrative Court of Lazio reasoned as follows:
- The case had significant elements in common with MasterCard's case before the General Court in Luxembourg.(2) For this reason, the temporary nature of MasterCard's proposed undertakings, which were limited in time in order to take into account the upcoming judgment of the General Court, could have been appropriate.
- The authority had omitted to carry out a proper assessment regarding a possible standstill of the authority's proceedings in light of the principle of supremacy of EU law.
- The authority had not conducted a proper investigation in relation to the economic justification of the undertakings and the so-called 'tourist test' (which the authority itself, in the course of proceedings, admitted was inapplicable).
The court ordered the authority to pay MasterCard's costs and those of the other parties. The authority can appeal to the Council of State. If it does so, a judgment will probably be rendered in 2012.
For further information on this topic please contact Andrea De Matteis at De Matteis Studio Legale by telephone (+39 06 983 784 11), fax (+39 06 699 212 35) or email ([email protected]).
Endnotes