European Commission vs. MasterCard: Antitrust Analysis of a Two-sided Market
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This article analyses the European Commission's MasterCard Decision of December 19th 2007, concerning the Fallback Multilateral Interchange Fee (MIF) paid by the creditor's bank to the debtor's bank in each credit card transaction with MasterCard or Maestro branded payment cards. The Commission found that MasterCard infringed article 81 of the Treaty because the MIF significantly restricted competition among acquiring banks by setting a price floor for the fees those banks charge to merchant costumers. This article offers a synthesis of the Commission's arguments supporting the Decision and discusses the consequences of the elimination of the MIF on intra-system and inter-system competition and on customers' welfare. It concludes that the approach of the European Commission in ruling the payment cards scheme lacks an adequate consideration of the network effects characterizing this market. The two-sidedness of the payment cards market not only offers efficiency justifications for the existence of the MIF, but also requires the adoption of an holistic approach in order to correctly measure the improvements of economic welfare due to antitrust interventions in the payment cards market.
- two-sided markets
- credit cards
- interchange fee