08 September 2008

MLex: Banks, retailers apply to intervene in MasterCard appeal before CFI

At least nine parties are understood to have applied to the Court of First Instance to intervene in MasterCard's appeal of last December's Commission decision which ruled the company's cross-border interchange fee incompatible with EU antitrust rules.

At least nine parties are understood to have applied to the Court of First Instance to intervene in MasterCard's appeal of last December's European Commission decision which ruled the company's cross-border interchange fee incompatible with EU antitrust rules. 

 

Eurocommerce, the leading complainant in the long-running case, has requested to intervene as well as its UK member the British Retail Consortium. They will be backing the commission in putting the case that the card fees applied by MasterCard are anticompetitive.

 

With a similar antitrust investigation under way in the UK's Office of Fair Trading, the British government is also understood to have asked to intervene in proceedings at the CFI. Britain has long been a battle ground for the disputed 'interchange fees' – the balancing charges between a consumer's bank and a shop's bank to undertake a card transaction. 

 

The ongoing case in Britain also seems to have encouraged several UK-based banks to apply to intervene. Applicants are said to include The Royal Bank of Scotland, HSBC, LloydsTSB and Bank of Scotland. RBSG was also an intervener on the side of MasterCard in the appeal against the first investigation undertaken by the OFT.

 

The principles of the commission's MasterCard ruling are to be felt well beyond the UK's borders – since it concerns cross-border fees – and Spain's Banco Santander is also understood to have sought the right to intervene. 

 

However, there seem to be no applicants among other national competition authorities, many of whom have ongoing investigations themselves. 

 

MBNA, part of Bank of America, is also said to have lodged an application with the CFI. With 7 million customers, it claims to be “the UK's largest credit card provider”.

 

In March, MasterCard lodged its formal appeal against the commission's decision arguing that its concerns rest on the commission's "failure to recognize that four-party payment systems cannot operate without default settlement terms [...] which [require] the setting of an interchange fee." 

 

It also disputes the commission’s “refusal to recognize the efficiencies that four-party payment systems create and the fairness of MasterCard’s interchange fees”.

 

Visa, Europe's other major card scheme, has confirmed it will not be intervening. The company is continuing negotiations with the commission over the level of its own fees. In its particular investigation, the commission has recently sought information from merchants on card use.

 

The court will now consider the applications and make its decision known at a later date as to whether the parties have a “legal interest” in the case and are allowed to intervene. 

 

Keeping an eye on proceedings in Europe and at home, the British Retail Consortium has requested to intervene, but as a full member of Eurocommerce – as well as due to past case law – there may be arguments that it would not be efficient for the court to allow both bodies to join proceedings. 

 

Others can still make applications but the official deadline has passed and therefore their interventions – if allowed – may only be oral in a court hearing. 

 

During the administrative proceeding against MasterCard there were twelve other companies/associations as well as the complainant Eurocommerce which made submissions to the commission. 

 

These were Ikea, British Petroleum, Visa Europe, Lufthansa's Airplus, retailers' interest group European Retail Roundtable, hotel associations HOTREC and OEHV, IATA, airport retail outlet Kappe International, and the Spanish payments schemes Servired, Sistema 4B and Euro 6000.

 

Ikea, IATA and the European Retail Roundtable are understood not to be making an application.

 

By Lewis Crofts

© MLex