MasterCard has applied to the European Court of First Instance
to annul a ruling by the European Commission (EC) that it claims
would harm consumers and undermine European competitiveness and
innovation.
The appeal relates to a ruling on 19 December 2007 by the EC,
the executive branch of the European Union, that MasterCard’s
multilateral interchange fees (MIF) for cross-border payment with
MasterCard- and Maestro-branded debit and consumer credit cards in
the European Economic Area (EEA) violate rules on restrictive
business practices.
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Expounding on the rationale for the appeal, the president of
MasterCard Europe, Javier Perez, said: “MasterCard firmly believes
that market forces, not regulation, should drive key decisions such
as the setting of interchange fees and retailers’ choices over
which forms of payment to accept.”
Perez continued that from a business perspective a payment
system that does not allow for efficient recovery of costs is not
sustainable in the long term, nor is it desirable because it limits
the scope for innovation in payment services offered to consumers.
He added that the Single Euro Payments Area for payment cards,
launched at the beginning of 2008, will continue to require
enormous investment and commitment by market players. “It’s
difficult to expect them to expand into new markets when regulation
lowers the incentive to take those risks,” stressed Perez.
In its ruling, the EC noted that while MIF are not illegal, in a
payment card scheme such as MasterCard’s, MIF is compatible with EU
competition rules only if it contributes to “technical and economic
progress and benefits consumers”.
MasterCard reaffirmed its intention to comply with the EC’s
order while the appeal proceeds. Failure to comply with the order,
which has a deadline of 21 June 2008, would see MasterCard
potentially face hefty financial penalties.
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By GlobalDataAccording to the EC, about 45 percent of all payment cards in
the EEA either bear a MasterCard or a Maestro logo.
