Australian watchdog sues Mastercard for anti-competitive practices


The Australian Competition and Consumer Commission (ACCC) on Monday began legal proceedings in Federal Court against Mastercard for allegedly stifling competition in the provision of debit card acceptance services.

The consumer watchdog said in a statement that it had taken legal action against Mastercard Asia/Pacific Pte Ltd and Mastercard Asia/Pacific (Australia) Pty Ltd.

Mastercard’s alleged anti-competitive behavior began in late 2017 as part of the Reserve Bank of Australia’s “least cost routing” initiative, aimed at increasing competition in the provision of debit card acceptance services and reduce payment costs for businesses by allowing them to choose the least expensive network to process their transactions.

This allowed businesses to choose whether their debit transactions were processed by Visa, Mastercard or eftpos, with eftpos often being the cheapest option.

“We allege that Mastercard had substantial market power in the provision of credit card acceptance services, and that a substantial purpose of Mastercard’s conduct was to impede the competitive process by deterring businesses from using eftpos for processing debit transactions,” said ACCC President Gina. Cass Gottlieb.

In response to the “least cost routing” initiative, Mastercard reportedly entered into agreements with more than 20 major retail companies, including supermarkets, fast food chains and clothing retailers.

The agreements granted these companies reduced rates for Mastercard credit card transactions, provided that they agreed to process all or most of their Mastercard-eftpos debit card transactions through Mastercard rather than through the network. eftpos, the consumer watchdog said.

This meant that these companies would not process large volumes of debit cards through the eftpos network, even though eftpos was often the cheapest provider.

“We are concerned that Mastercard’s alleged conduct has prevented businesses from fully benefiting from the increased competition that was to come from the Least Cost Routing initiative,” Cass-Gottlieb said.

The ACCC investigated allegations that Mastercard engaged in anti-competitive behavior by offering certain large merchants cheaper interchange rates (known as “strategic merchant rates”), for processing credit card payments if they accepted to process Mastercard-eftpos debit card payments through the Mastercard network.



(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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