Australian Economy

Australian watchdog sues Mastercard for anti-competitive practices



The Australian Competition and Consumer Commission (ACCC) on Monday started legal proceedings in the Federal Court against for allegedly stifling competition in the supply of acceptance services.


The consumer watchdog said in a statement that it has instituted proceedings against Asia/Pacific Pte Ltd and Asia/Pacific (Australia) Pty Ltd.





Mastercard’s alleged anti-competitive conduct commenced in late 2017 in the context of the Reserve Bank of Australia’s “least cost routing” initiative, aimed to increase competition in the supply of acceptance services and reduce payment costs for businesses by allowing them to choose the lowest cost network to process their transactions.


This enabled 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 power in the market for the supply of credit card acceptance services, and that a substantial purpose of Mastercard’s conduct was to hinder the competitive process by deterring businesses from using eftpos for processing debit transactions,” said ACCC Chair Gina Cass-Gottlieb.


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


The agreements gave these businesses discounted rates for Mastercard credit card transactions, provided they committed to processing all or most of their Mastercard-eftpos transactions through Mastercard rather than the eftpos network, said the consumer watchdog.


This meant that these businesses would not process significant debit card volumes through the eftpos network even though eftpos was often the lowest cost provider.


“We are concerned that Mastercard’s alleged conduct meant that businesses did not receive the full benefit of the increased competition that was intended to flow from the least cost routing initiative,” said Cass-Gottlieb.


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


–IANS


na/dpb

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

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