02 May 2008

MLex: EC rejects MasterCard's request to extend deadline for redrafting card fees

The European Commission has rejected a request by MasterCard for an extension to the six-month period granted for the company to amend its cross-border payment card fees after they were judged anti-competitive last December.

Following a long-running probe into so-called 'interchange fees' – charges paid between a customer's and a shop's bank to balance a card transaction – the commission ruled MasterCard's version of the fees illegal, but took the rare step of giving the company six months to comply and come back with a redrafted fee. 

The company made a case for extending the period but the commission rejected its request on 26 April. 

For now, the six-month deadline stands for MasterCard to table a reworked fee but the December decision does allow for possible extensions at the commission's discretion; moreover, the 21 June date is unlikely to signal judgement day for the fees. 

Nevertheless, at the time of the decision, the commission's rhetoric was tough, reminding the company of the penalties for not complying with the decision: daily penalties of up to 3.5 percent of MasterCard's global turnover. 

While the decision remains under appeal at the Court of First Instance in Luxembourg, MasterCard has since been in talks with the commission, seeking clarity on what kind of proof is needed to show that the fees can bring consumer benefit and therefore comply with antitrust law. 

Beyond the specifics of the competition case, Javier Perez, President of MasterCard Europe, is meeting Internal Market Commissioner Charlie McCreevy next Tuesday where broader payments issues will doubtless be discussed. 

But MasterCard is not the only payments network under EU scrutiny. The commission has also recently opened a case against Visa Europe, looking into its cross-border interchange fees. The card association will be looking carefully at the steps its rival takes as it seeks to redraw its fees and reach a settlement with the commission. 

By Lewis Crofts

© MLex