UK OFT Says Mastercard Interchange Fee Agreement Anti-Competitive

Reuters reports that the UK's Office of Fair Trading said Tuesday that fees charged by members of MasterCardUK infringed competition rules and resulted in higher retail prices.

The OFT said a collective agreement between the MasterCard UK Members Forum (MMF) setting the interchange fee -- charges paid by retailers to issuing banks -- on almost all purchases between March 2000 and November 2004 restricted competition.

"The parties to this collective agreement set the interchange fee to derive revenues from retailers and their customers over and above the costs of providing the payment services," John Vickers, OFT chairman, said in a statement. "This unduly high interchange fee was like a tax on UK consumers."

The full press release is available at the OFT web site along with a companion paper (PDF) with more background on the rationale for the decision.

AFX New Unlimited reports that MasterCard expressed strong disagreement with the OFT's conclusions and that it will appeal the decision.