EU says MasterCard may have broken antitrust rules

International credit card company MasterCard Inc may have violated European Union antitrust rules by restricting competition between banks, the EU's top competition authority said over the weekend.

The European Commission, the EU's executive arm, said it had sent a supplementary statement of objections (SO) to the company on June 23. This was a preliminary document and the Commission had yet to decide if MasterCard had broken EU rules, it said.

"In its SO, the Commission takes the preliminary view that MasterCard restricts competition between member banks by pre-determining a minimum price retailers must pay for accepting MasterCard and Maestro branded payment cards," it said.

"The Commission's preliminary view is that such behaviour is contrary to the EC Treaty's ban on restrictive business practices," it said in a statement. The statement of objections related to the company's "cross-border interchange fees", or inter-bank fees paid by merchant banks to card-issuing banks for over-the-counter payments with a MasterCard or Maestro branded payment card.

It followed a similar statement of objections that the Commission sent to MasterCard in September 2003.

MasterCard's cross-border interchange fees applied to all cross-border transactions in the EU and to domestic transactions in nine EU countries, the Commission said.

Roughly 45 per cent of all payment cards issued in the European Economic Area (EEA) bear a MasterCard or Maestro logo.

MasterCard's debit cards are accepted at around 85 per cent of merchants accepting debit cards in the EEA, it added.

MasterCard is the world's number two payment system after Visa. More than 24 million merchants in about 210 countries accept its cards, which generate more than 16 billion payments a year.