MasterCard Could Lose Role In Setting EU Bank Fees

Separately, MasterCard issued a statement:

MasterCard can confirm that it received a 'Supplementary Statement of Objections' (SSO) from the EU Commission on Friday 23rd June. MasterCard has been expecting this document for quite some time.

A number of misleading reports regarding the SSO have appeared stating that MasterCard faces the possibility of fines from the European Commission in relation to this matter. This is incorrect. The European Commission has informed MasterCard that it does not envision imposing a fine upon MasterCard in the event that it determines MasterCard's cross-border interchange fees do not comply with the competition laws.

The SSO forms part of a long-running dialogue with the Commission, which started in May 1993 when MasterCard Europe (then Europay International) voluntarily notified the EU Commission of its business arrangements.

The SSO sets out the Commission's understanding of card payments and concerns it has regarding some of MasterCard's business arrangements. It supplements a Statement of Objections issued in September 2003, to which MasterCard responded in January 2004. The issuance of a SSO is part of the administrative process for the Commission to form a view on the compatibility of MasterCard's business practices with EU law. MasterCard now has the opportunity to respond in writing to the Commission's SSO and present its views in a hearing later this year.

MasterCard has always maintained that its interchange fees, and the manner in which they are established, are entirely lawful because, among other things, they enable MasterCard's payment business in Europe to compete effectively with other payment providers. Interchange fees are critical to the ability of four-party payment systems, like MasterCard, to operate in an efficient and competitive manner, since they allow the cost of providing payment services to be recovered in a way that maximizes the demand for the services. This is good for both cardholders and merchants since cardholders benefit when more merchants accept MasterCard cards, and merchants benefit when more cardholders carry and use MasterCard cards.

There is no date or deadline set down for the adoption of a final decision by the EU Commission on these issues. Furthermore, a Commission's negative finding may be appealed to the European courts.