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Court of Justice rejects MasterCard appeal

11/09/14

By decision of 19 December 2007 the European Commission declared the multilateral interchange fees (the MIF) applied under the MasterCard card payment system to be contrary to Article 101 TFEU. The Commission found that the MIF had the effect of setting a floor under the costs charged to merchants and thus constituted a restriction of price competition that was to their detriment. The Commission also took the view that it had not been demonstrated that the MIF could generate efficiencies capable of justifying its restrictive effect on competition.

MasterCard’s application in Case T-111/08 to annul the Commission decision was dismissed by the EU General Court in a judgment handed down on 24 May 2012.

In a judgment handed down on 11 September 2014, the Court of Justice of the EU (Third Chamber) dismissed MasterCard’s appeal against the General Court’s judgment together with the cross-appeals of banks which had intervened in support of MasterCard.

The Court of Justice held that the General Court had not erred in law by ruling that:

the Commission did not err in concluding that the MasterCard payment system constituted an ‘association of undertakings’ within the meaning of Article 101(1) TFEU following MasterCard Inc’s initial public offering on the New York Stock Exchange in 2006;
the MIF could not be considered to be objectively necessary for the operation of the MasterCard system (although the Court of Justice did consider the General Court had made some non-material errors of law in its reasoning);
the Commission had demonstrated in its decision that the MIF had restrictive effects on competition; and
the Commission had concluded without erring in law that MasterCard had not demonstrated that the MIF satisfied the conditions for exemption under Article 101(3) TFEU.

The judgment is here.

Aidan Robertson QC represented the original complainant, the British Retail Consortium, which intervened in support of the European Commission, instructed by Dechert LLP.

Mark Hoskins QC represented Royal Bank of Scotland which intervened in support of MasterCard and cross-appealed from the General Court, instructed by Ashurst LLP.

James Flynn QC represented Lloyds Banking Group (comprising Lloyds TSB Bank and Bank of Scotland) which intervened in support of MasterCard and cross-appealed from the General Court, instructed by Herbert Smith Freehills LLP.