MasterCard faces £160m competition fine from EU

Published on Friday 30 June 2006 12:44

CREDIT card group MasterCardwas today facing a fine of up to £160 million after being formally charged by the European Union with hampering competition between banks.

MasterCard confirmed that it had received a "statement of objections" giving an outline of the charges the EU was levelling against it and immediately warned it could appeal against any judgement against it.

The move cranks up the battle between the EU and the credit card industry by another notch.

In April, EU competition commissioner Neelie Kroes accused MasterCard and Visa of making "outrageous profits", while also claiming the duo operated a "closed shop".

The charges levied against MasterCard state that the EU has taken "the preliminary view that MasterCard restricts competition between banks by predetermining a minimum price retailers must pay for accepting MasterCard and Maestro branded payment cards".

If found guilty, MasterCard - which commands about 45 per cent of the European credit card market - faces a fine of up to ten per cent of its annual turnover, which was 1.6 billion last year.

But the EU also warned that it could "prohibit" the company's so-called interchange fees, which are paid between banks that service outlets accepting credit cards and the banks servicing the cardholder.

Britain's Office of Fair Trading said earlier this month that it would continue to investigate MasterCard fees even though it abandoned a previous probe.