Brussels, 24/05/2012 (Agence Europe) - On Thursday 24 May, the EU General Court upheld the European Commission's decision of December 2007 prohibiting the multilateral interchange fees (MIF) applied by MasterCard within the European Economic Area and the eurozone. It confirms the injunction that the payment system should stop this practice within six months, failing which heavy fines will be imposed. The General Court's decision may encourage the Commission to take action against other credit card companies such as Visa Europe, for their credit and differed debit card payments.
MIF correspond to a proportion of the price of a payment card transaction that is retained by the card-issuing bank. The cost of the MIF is charged to merchants in the more general context of the costs which they are charged for the use of payment cards by the financial institution which handles their transactions. In its 2007 decision, the Commission had considered that MIF had the effect of setting a floor under the costs charged to merchants and thus constituted a restriction of price competition that was to their detriment. The MasterCard payment organisation and the companies representing it (MasterCard Inc. and its subsidiaries MasterCard Europe and MasterCard International Inc.) were therefore ordered to bring the infringement to an end by formally repealing the MIFs within six months, failing which they would be fined 3.5% of their daily consolidated global turnover. These companies had called for annulment of the Commission's decision, and were supported in that by different European banks, the United Kingdom and two merchants' associations.
The General Court dismissed the action and rejected the arguments brought forward by MasterCard. It states that: - The MIFs are not objectively necessary for the operation of the MasterCard system, and the Commission could legitimately conclude that, in the absence of the fees, merchants would have been able to exert greater competitive pressure on the amount of costs charged to them for the use of payment cards. - It was valid for the Commission to continue its characterisation of MIF in terms of a “decision of association of undertakings” in relation to MasterCard Inc, and the financial establishments taking part in the MasterCard payment system. Despite changes that took place following MasterCard Inc.'s initial public offering on the stock exchange in 2006, the MasterCard payment organisation had remained an institutionalised form of coordination of the conduct of the participating financial institutions, which continued collectively to exercise decision-making powers in respect of the essential aspects of the operation of the MasterCard payment organisation. Furthermore, there is a community of interests between the MasterCard payment organisation and the financial institutions in the MIF being set at a high level. - The advantages of the MasterCard system for merchants (guaranteed payment, rapid settlement of transactions, rise in number, etc.) could not warrant an exemption to MIF under Article 81 of the Treaty (like that granted by the Commission to MIF for Visa in its Visa II decision), mainly due to the fact that, in this specific case, the methods for fixing the amounts of MIF tended to overestimate the costs borne by the financial institutions on issuing payment cards and, moreover, to inadequately assess the advantages which merchants derive from that form of payment. (FG/transl.jl)