The European Commission has slammed Mastercard with a €570.6 million ($650 million) fine for violating anti-trust laws. The card company was found to wrest the hands of banks to apply interchange fees in a monopolistic way that forced users to only use them. The act limited merchant options so that Mastercard became the only money card that users found friendly.
Before December 2015, the interchange fees in the European Union were never the same. So the EU limited the fee at 0.2% of what people bought and 0.3% of transactions carried out with debit and credit cards. This restricted fee made the cost of items cheaper with cards, and retailers also had reduced costs of business. But regulators in 2013 initiated investigations that found that Mastercard made customers pay more bank charges which ultimately forced up the cost of items, with the card company making more in the process.
The EU regulators found that retailers would pay lesser bank fees in countries with low interchange fees, lowering costs of items for everyone, if Mastercard had followed stipulated regulations.
“By preventing merchants from shopping around for better conditions offered by banks in other Member States, Mastercard’s rules artificially raised the costs of card payments, harming consumers and retailers in the EU,” said Margrethe Vestager, commissioner in charge of competition policy in the EU.
The fine was reduced by 10% to $650 million because Mastercard cooperated with investigators during the entire process. The fine represented the length of period the infringement lasted, the amount of sales made during this period, and how well the card company cooperated with the authorities during investigations.
The fine did not impact on Mastercard’s share price as some people feared. It only dropped by 1.26% to reach $199.46.
Mastercard is not the first major company to be fined for violating anti-trust laws in the EU. The European Commission in July 2018 fined Google $5 billion for forcing Android device manufacturers to make Chrome and Google Search the default search tools on the mobile devices.
