The European Court’s judgment today means that MasterCard will have to remove its MIF on cross-border transactions for consumers cards, within 6 months. If they do not comply, they will have heavy fines imposed..

The GRTU said that it “welcomes the European Court’s decision today where it upheld the Commission’s 2007 decision on MasterCard, ruling that the MIF set a floor under the costs charged to merchants and thus constituted a restriction of price competition that was to their detriment.”

GRTU continued, “we are delighted with this decision, which wholly vindicates retail’s ten-year campaign against these anti-competitive fees. We now call on the European Commission to follow this up with radical and decisive regulatory solutions to make payments in Europe truly competitive.”

The union said it “commends the court on its unequivocal rulings on the economic basis of the multilateral interchange fee (MIF): these clearly show that the court upholds the Commission’s view on the anti-competitive nature of the MIF. The retail sector has long argued that the MIF is an unseen and non-negotiable burden for merchants and the Commission’s own figures show that card transactions cost EU merchants €25 billion per year.”

What happens next?

The ECJ’s judgment means that the MasterCard cross-border MIF is contrary to EU competition law and must be removed. “We also trust that the national competition authorities will now follow the ECJ’s lead, GRTU has already informed the MFSA of the good news.”

In 1997, EuroCommerce lodged complaints with the European Commission against EuroPay (now part of MasterCard Incorporated) and Visa.

Ten years later the European Commission issued a decision which confirmed that:

1) MasterCard’s MIF, in effect, sets a minimum price that merchants must pay to their acquiring bank, and therefore infringes Article 101(1) of the Treaty of the European Union and

2) MasterCard failed to show that the conditions (in essence efficiency) of Article 101

3), which give exemption from the Article 101 prohibition, were satisfied. In 2007, the Commission ruled that MasterCard’s MIF was in breach of European competition law and ordered the card scheme to remove it. As a consequence, MasterCard set its cross-border MIF to zero in 2008, but appealed the Commission decision.

The European Court has now rejected that appeal and upheld the Commission decision. MasterCard can still appeal to the higher court on a point of law.

Permalink: Today’s ECJ vindicates ban on anti-competitive card fees