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This article was written by​ Dr Annalies Muscat and Dr Laura Spiteri.​
On 22 January 2019, the European Commission (“the Commission) fined MasterCard for limiting the possibility for retailers to benefit from lower interchange fees in other Member States.This follows the call for feedback on commitments offered by Visa and MasterCard regarding the competition concerns raised by inter-regional interchange fees for payment card transactions (read more here).

The fine comes as a response to MasterCard’s breach of competition rules, which MasterCard admitted to. Prior to the implementation of the Interchange Fee Regulation,[1] the aim of which was to introduce caps on interchange fees to make the level of interchange fees more consistent at national level,[2] MasterCard subjected acquiring banks to applying the interchange fee of the jurisdiction where the retailer was located, even if the cardholder’s bank was located in a jurisdiction with a lower interchange fee.Interchange fees imposed on retailers are in turn imposed on consumers, so this arrangement led to higher prices for retailers and consumers, to limited cross-border competition, and to an artificial segmentation of the internal market.

Following MasterCard’s admission, the Commission imposed a €570 million fine. However, given MasterCard’s cooperation throughout this investigation, MasterCard benefitted from a 10% reduction in the fine imposed on it by the Commission.[3]

More information about this case can be found here:

[1] Regulation 2015/751 of the European Parliament and of the Council of 29 April 2015 on interchange fees for card-based payment transactions
[2] ibid. Recital 7
[3] Vide: Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003 

This document does not purport to give legal, financial or tax advice. Should you require further information or legal assistance, please do not hesitate to contact Dr. Annalies Muscat or Dr. Laura Spiteri.