European Commission fines MasterCard €570m for antitrust breach

The European Commission has fined MasterCard €570m for breaching EU antitrust rules.

Mastercard was fined due to it ‘limiting the possibility for merchants to benefit from better conditions offered by banks established elsewhere in the Single Market’. This closes an investigation which was launched in 2013.

When a consumer uses a payment card at a shop or online, the acquiring bank pays an interchange fee to the cardholder’s bank. This is then incorporated into the fee at the retailer.

Mastercard required acquiring banks to apply interchange fees of the country the retailer was located in. In 9 December 2015 the Interchange Fee Regulation introduced fee caps, but before this, fees varied across countries in the EEA.

Due to Mastercard operating in this manner, it meant retailers in high-interchange fee countries could not benefit from lower interchange fees which were offered by acquiring banks in other EU member states.

The European Commission opened an antitrust investigation into Mastercard in 2013. It found that Mastercard had forced retailers to pay more in bank services than they would have if they could search for cheaper options. In turn, this made consumers and retailers having higher prices.

Mastercard was found in breach of EU antitrust rules but amended its rules when the Interchange Fee Regulation was deployed.

Commissioner Margrethe Vestager said, “European consumers use payment cards every day, when they buy food or clothes or make purchases online. By preventing merchants from shopping around for better conditions offered by banks in other Member States, Mastercard’s rules artificially raised the costs of card payments, harming consumers and retailers in the EU.”

Due to Mastercard’s close cooperation, the European Commission decided to reduce the fine by 10 per cent.

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