On 24 May 2012, the General Court of the European Union
delivered a judgment dismissing MasterCard's appeal against a
European Commission decision of 2007 that found that
MasterCard's multilateral interchange fees (MIFs) on
cross-border transactions amounted to an anti-competitive business
practice in breach of Article 101 TFEU (see VBB on Competition Law,
Volume 2008, Nos 1 and 4, available at
MIFs are fees charged by a cardholder's bank (the
card-issuing bank) to a merchant's bank for each transaction
made with a card. The amount of the fee corresponds to a proportion
of the price of the transaction and is retained by the card-issuing
bank. In its decision, the Commission essentially argued that such
fees prompt retailers to increase their prices in order to cover
the cost of these fees. Furthermore, the Commission stated that
MIFs had the effect of setting a floor under the costs charged to
merchants and thus constituted a restriction of price competition
to the detriment of merchants and consumers.
In its appeal to the General Court, MasterCard argued that, in
the absence of MIFs, financial institutions would find it necessary
to offer their customers other types of payment cards or would find
it necessary to reduce the benefits to cardholders, thus affecting
the MasterCard system's viability. The General Court rejected
MasterCard's argument that the MIFs were "objectively
necessary" to operation of the MasterCard payment system,
considering it "unlikely that, without an MIF, an appreciable
proportion of banks would cease or significantly reduce their
MasterCard issuing business or would change the terms of the issue
to such an extent as to be likely to result in holders of those
cards favouring other forms of payment or payment cards".
Furthermore, the Court upheld the Commission's assessment on
the effects of the MIF on competition, holding that without the
MIF, "merchants would be able to exert greater competitive
pressure on the amount of the costs they are charged for the use of
MasterCard also challenged the Commission's characterisation
of the MIF as a decision by an association of undertakings on the
basis that, since its IPO on the New York Stock Exchange in 2006,
MasterCard had ceased to be controlled by the financial
institutions participating in the MasterCard system and thus that
those institutions played no role in setting the MIF level. In that
regard, the General Court noted that despite MasterCard's IPO,
financial institutions continued to exercise decision-making powers
in respect of the essential aspects of the operation of the
MasterCard system. Furthermore, there was a "commonality of
interests" between MasterCard and the financial institutions
in having the MIF set at a high level. Therefore, the General Court
concluded that MasterCard had remained an association of
undertakings in the sense of Article 101(1) TFEU and that the
Commission was correct to characterise it as such.
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