MasterCard UK Members Forum Limited

No. CA98/05/05

This decision was appealed to the Competition Appeal Tribunal on 2 November 2005. On 19 June 2006 the Competition Appeal Tribunal set aside the OFT's decision. For further details see Competition Appeal Tribunal website.

Investigation of the multilateral interchange fees provided for in the UK domestic rules of MasterCard UK Members Forum Limited (f ormerly known as MasterCard/Europay UK Limited)

6 September 2005

The Office of Fair Trading has concluded that members of the MasterCard UK Members Forum and other MasterCard licensees in the UK have been party to an agreement which infringes both:

• the prohibition in Article 81(1) of the EC Treaty, and
• the Chapter I prohibition in section 2 of the Competition Act 1998.

This agreement, setting the level of the fallback multilateral interchange fee which applied to all transactions made using UK issued MasterCard cards, was effective from 1 March 2000 to 18 November 2004. From 18 November 2004, new arrangements for setting the fallback interchange fee applying to UK MasterCard transactions were introduced.

The OFT has found that the infringing agreement has restricted competition in two ways. First, it gave rise to a collective agreement on the level of the multilateral interchange fee (essentially, a collective agreement on price). Secondly, it resulted in the unjustified recovery of certain costs (extraneous costs) incurred by MasterCard UK Members Forum members and other MasterCard licensees through the multilateral interchange fee.

The infringing agreement was notified to the OFT for decision on 1 March 2000. In light of all circumstances of this case, the OFT does not consider it appropriate to impose a penalty in respect of the infringement arising from the agreement. Because the agreement is now at an end, the question of directions does not arise in this case. However, the principles which inform this Decision are likely to be applicable to the new arrangements for setting the fallback interchange fee.

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