The case centred
on charges levied by MasterCard banks on shops, which the OFT
called effectively a consumer tax. Action begun in 2000 did not
yield a decision by the OFT until 2005, when the OFT issued a
decision against the credit card group
By that time, though, the charging structure had changed.
MasterCard appealed the decision to the Competition Appeal
Tribunal, while the OFT launched a second case against the revised
charging structure, called interchange fees.
The original case reached the Competition Appeal Tribunal (CAT),
but earlier this week the OFT was requesting the withdrawal of its
original case so that it could concentrate resources on its new
case. Amid debates about the acceptability of that practice the CAT
quashed the case with the consent of the OFT.
"We applaud the CAT's action to quash the OFT decision," said
MasterCard's General Counsel Noah J Hanft. "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."
The OFT claimed that its move was down to a desire to address
current, and not historic, arrangements. "It is in the best
interests of consumers and businesses to see this problem addressed
quickly through focussing on current fees rather than historic
ones," said OFT chief executive John Fingleton.
"We still believe that collectively agreed interchange fees go
against the principles and letter of competition law and are
harmful to consumers who see higher prices as a result," he
said.
MasterCard's fees used to be set by member banks, prompting one
of the OFT charges. They are now set by MasterCard headquarters
independently of the member banks, removing one of the bases of the
OFT case.
MasterCard has asked for costs in the case. "While we are
pleased that the OFT has finally walked away from what was an
ill-considered case, it is unfortunate that it took the OFT nearly
six years to realise the weakness of its case," said Hanft.
"MasterCard has, therefore, asked the CAT to award it costs in
connection with the appeal."
