MasterCard accused of restricting competition

MASTERCARD is being investigated for fixing a minimum price retailers must pay for processing its MasterCard and Maestro cards, the European Commission announced.

It has 45% of the EU plastic card market which it dominates with Visa and which handled transactions worth more than €1,350 billion last year.

The Commission believes the way MasterCard sets fees restricts competition between banks and results in consumers paying more than they should for the service.

The company has replied to earlier statements of objection from the Commission claiming that the system is very efficient and this outweighs any restrictions on price competition.

However the Commission says it is not convinced by this argument and is taking a preliminary view that their actions do in fact limit competition.

In April Competition Commissioner Neelie Kroes suggested only two countries in the EU had adequate competition when it came to credit cards, and Ireland was not one of them.

She said that the results of the situation was that consumers were paying more than they should for using credit cards.

In Britain the Office of Fair Trading is also taking action against MasterCard over the same issue. It has called the fees a tax on consumers as the costs are passed onto card users.