MasterCard celebrates UK interchange victory as OFT reverses judgement

MasterCard celebrates UK interchange victory as OFT reverses judgement

MasterCard is celebrating victory in a six-year battle with the UK's Office of Fair Trading over interchange fee arrangements, after the Competition Appeals Tribunal (CAT) quashed a previous damning OFT judgement.

MasterCard says the tribunal quashed the ruling after the OFT sought to withdraw its original decision, made in September last year, that stated that interchange fees set collectively by MasterCard UK Members Forum (MMF) - which includes most of the company's UK customer banks - between March 2000 and November 2004 infringed competition rules.

Comenting on the decision, MasterCard general counsel, Noah Hanft, says: "MasterCard has always maintained that these interchange fees, and the manner in which they were established, were entirely lawful because, among other things, they enabled MasterCard's credit card business in the UK to compete effectively with other payment providers."

Hanft says MasterCard has asked the CAT to award it costs in connection with the appeal.

According to MasterCard, the OFT has told the CAT that it will not initiate further proceedings against its pre-November 2004 interchange fee arrangements, but the watchdog will continue to investgate MasterCard's current fee structure in the UK, which is set by the company's management.

MasterCard says it believes that any further proceedings by the OFT would be "fruitless".

Last year the OFT also ruled that interchange fees charged by Visa's UK members for processing card transactions are anti-competitive.

The OFT said in October that a collective interchange agreement between Visa and its member banks has resulted in an unduly high fee being paid to card issuing banks by merchant acquirers on every Visa transaction. The card association is appealing the ruling.

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