European Union: CJEU Affirms Commission’s Decision Against MasterCard Interchange Fees

On Sept. 11, 2014, the Court of Justice of the European Union (CJEU) rejected MasterCard's appeal against the General Court's 2012 judgment that the European Commission (Commission) had been correct in its assessment that MasterCard's multilateral interchange fees (MIFs) breached Article 101(1) of the Treaty on the Functioning of the European Union (TFEU). CJEU also simultaneously dismissed cross-appeals from Royal Bank of Scotland and Lloyds Banking Group.

In December 2007, the Commission found that the decisions of the MasterCard payment organization in setting MIFs constituted decisions by an "association of undertakings" falling within the scope of Article 101(1) TFEU, and that the MIFs had appreciable restrictive effects on competition, which affected trade between EU Member States. The Commission concluded that the MIFs were not objectively necessary for MasterCard's system to operate and to compete. MasterCard appealed to the General Court in the first instance and its appeal was dismissed.

MasterCard subsequently appealed to the CJEU on the grounds that the General Court had made an error in concluding that the MasterCard payment organization constituted an association of undertakings under Article 101(1) TFEU and that the MIFs were not objectively necessary.

The Court held that, despite changes to the structure of MasterCard, such as its initial public offering in 2006, the decision setting the MIFs had been taken by an association of undertakings because of a commonality of interests between MasterCard and member banks. In addition, the Court found that the General Court had correctly applied the "objective necessity" test, which allows companies to continue restrictive behavior if it is objectively necessary to do so. The Court held that for conduct to be objectively necessary, it must be impossible to achieve the main objective without engaging in the restrictive behavior. Merely making it more difficult or less profitable is not sufficient. The appeal was dismissed.

The full CJEU judgment is available here.

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