ANTITRUST AUTHORITY INVESTIGATES MASTERCARD AND EIGHT BANKS AND FINANCE COMPANIES OVER ALLEGED ANTI-COMPETITIVE CONDUCT IN THE CREDIT CARD BUSINESS IN ITALY

This step was notified today during the course of a number of inspections carried out in collaboration with Special Units of the Guardia di Finanza [Fiscal Police]. The companies under investigation are Mastercard, Banca Monte dei Paschi di Siena, Banca Nazionale del Lavoro, Banca Sella Holding, Barclays Bank, Deutsche Bank, Intesa Sanpaolo, ICBPI and Unicredit. The proceeding must determine whether the fixing of national interbank fees limits competition, so that high costs are passed on to consumers and merchants.

The Italian Competition Authority, at its meeting on 15 July 2009, decided to open an investigation to determine whether Mastercard and the banks Monte dei Paschi di Siena, Banca Nazionale del Lavoro, Banca Sella Holding, Barclays Bank, Deutsche Bank, Intesa Sanpaolo, ICBPI (Istituto Centrale delle Banche Popolari Italiane) and Unicredit set up a series of anti-competitive arrangements in the credit card sector. The investigation, of whose launch the  interested parties were advised during the course of a number of inspections carried out in collaboration with the Special Units of the Guardia di Finanza, must establish whether MasterCard's fixing of national interbank commissions for transactions using its credit cards in Italy and the application of those commissions by the participating banks reduces competition in Italy and transfers high costs onto shopkeepers and consumers.

Mastercard's presence in the Italian market is significant (its market share is estimated at around 35-45% and is constantly growing). For each transaction, i.e. each purchase by an individual consumer in a shop, the company charges a national interbank commission (interchange fee); this fee goes to the bank that issued the card and is paid over by the bank that manages the relationship with the particular shopkeeper. It is a uniform fee that, because it represents a considerable percentage of the overall merchant fee, may limit competition, thus raising costs within the system.

In the view of the Antitrust Authority, the fixing of a high interchange fee benefits both MasterCard and the 'acquirer' banks that manage relations with the merchants, as well as the 'issuer' banks that issue cards to customers. MasterCard benefits from high interbank fees because they provide an incentive for the banks that receive the fee to issue MasterCards and that, in turn, increases the number of potential transactions on which the banks managing relations with the shopkeepers can levy the merchant fee.

The investigation must determine whether the setting of the interchange fee by Mastercard and its application by the acquirer banks represent anti-competitive behaviour in the following two ways: a horizontal arrangement for the definition of the Italian fees by the Mastercard consortium – being the result of a decision by an association of enterprises -; and/or a set of vertical arrangements based on licensing contracts between Mastercard and the individual acquirer banks that lead to the uniform coordinated application of identical fees, thus limiting competition.