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May 30, 2022

Mastercard faces lawsuit in Australia for alleged misuse of market power

The Australian Competition and Consumer Commission (ACCC) said that it has filed a lawsuit against US payment for alleged anti-competitive conduct.

The ACCC said instituted proceedings against Mastercard Asia Pacific and Mastercard Australia for engaging in activities that substantially decreased competition in the supply of debit card acceptance services.

Mastercard’s started its anti-competitive conduct in late 2017 following the Reserve Bank of Australia’s (RBA) least cost routing initiative, the commission said.

The RBA’s initiative was aimed at driving competition in the supply of debit card acceptance services and cutting down payment costs for businesses by enabling them to choose the lowest cost network to process their transactions.

This allowed businesses to choose Visa, Mastercard or eftpos to process their debit transactions, with eftpos often being the cheapest option.

In the wake of the RBA initiative, Mastercard allegedly signed deals with more than 20 major retail businesses, including fast food chains, supermarkets, and clothing retailers.

These deals offered the businesses discounted rates for Mastercard credit card transactions if they agreed to process all or most of their Mastercard-eftpos debit card transactions via Mastercard rather than the eftpos network.

This agreement prevented businesses from processing significant debit card volumes through the eftpos network even though eftpos offered lower costs, according to ACC.

ACCC Chair Gina Cass-Gottlieb said: “We allege that Mastercard had substantial power in the market for the supply of credit card acceptance services, and that a substantial purpose of Mastercard’s conduct was to hinder the competitive process by deterring businesses from using eftpos for processing debit transactions.

“We are concerned that Mastercard’s alleged conduct meant that businesses did not receive the full benefit of the increased competition that was intended to flow from the least cost routing initiative.”

The ACCC said it is now seeking declarations, penalties, costs, and other orders.

In 2018, the commission initiated legal action against car rental company Europcar for allegedly imposing excessive credit and debit card surcharges.

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