MasterCard engaged in ‘anticompetitive’ behaviour- EU Commission

The European Commission has opened an investigation as to whether MasterCard is unfairly offsetting competition in the European Economic Area, which is considered a breach of EU antitrust regulations.

MasterCard, the world’s second largest credit card network, may be dabbling in ‘anticompetitive’ practice by charging inter-bank fees across borders, Reuters reports. The inter-bank fees vary considerably within EU member states, which puts MasterCard at an unfair advantage. 

“The interbank fees are generally passed on to merchants, leading to higher overall fees for them,” the Commission said on Tuesday.

“Ultimately, such behaviour is liable to slow down cross-border business and harm EU consumers.”

EU consumers, as well as businesses, make up more than 40% of their non-cash payments by credit card, so these fees are being closely looked at by the Commission.

“MasterCard intends to fully cooperate with the commission,” the company wrote to Bloomberg via email.

“As a global electronic payments company MasterCard always aims to balance the interests of both consumers and retailers to ensure that each party pays its fair share of the costs for the benefits it receives.”

If found guilty, MasterCard could be fined up to $740 million, 10% of its 2012 revenue. Net revenue rose 13% from 2011.

In 2007, the Commission prohibited MasterCard from charging cross-border inter-bank fees, alleging the company had unfairly inflated transaction fees paid by retailers for processing payments, a decision MasterCard appealed against in 2012, and settled for $13 million.

EU regulators are also simultaneously investigating Visa Europe over similar antitrust transaction fees.

The Commission is especially piqued by transactions made by cardholders from non EEA countries - that is - tourists who use their MasterCard while traveling in Europe. The Commission plans to put forward rules by the summer that will “ensure legal certainty and a durable level playing field across the EU for all providers."

In 2012, MasterCard reported a net income of $2.8 billion, up 15% from 2011.