EU Rulings on Cartes Bancaires and MasterCard Cases


CB v European Commission (Case C-67/13 P)

The Cartes Bancaires system is by far the biggest payment system in France. The system was established by a group of 11 French banks in 1984 in order to achieve interoperability between the payment and cash withdrawal systems used for bank cards issued by the system’s members. The system operates on the basis of a Formation Agreement and Rules of Procedure. The 11 “main members” of the Groupement form a closed group, there being no procedure for outsiders to acquire the status of “main member”. By the time of the Commission’s decision there were 149 members in total, the “secondary members” having to be attached to a main member bank.

In 2002, CB adopted three measures relating to the fees it charged its members, which it notified to the Commission shortly before the ability to notify agreements to the Commission for clearance was withdrawn. The measures consisted of:

  • a fee under the ‘mechanism for regulating the acquiring function’ (MERFA) which would be payable by members whose CB card issuing activity exceeded their acquisition activity (acquiring new merchants to use the system);
  • a revised membership fee, whereby members would pay a supplementary fee when their CB cards in stock exceeded a certain threshold; and
  • a ‘dormant member “wake up”’ fee payable per CB card issued by inactive/not very active members.

CB claimed the measures were adopted in order to increase the number of merchants affiliated with the CB system and to prevent certain members from free-riding on contributions made by other larger members. The Commission did not accept this. It concluded the measures had an anti-competitive object. It found that the real objectives of the measures, as it said was acknowledged by the main members in the course of their creation, were to impede competition for new entrants and to penalise them for increasing issuing activity, the intention being to safeguard the status quo, protect main members’ revenue and limit price reductions for CB cards.

In 2012, the General Court dismissed CB’s appeal, inter alia holding that the measures restricted competition “by object” and that there was therefore no need to examine the effects of the measures on the market.

On appeal to the Court of Justice, CB argued that the General Court had erred in law in its application of the concepts of restriction of competition by object and by effect. The Court of Justice found that the General Court had failed to have regard to relevant case law concerning the legal criteria for the assessment of whether there was a restriction of competition “by objectthe concept of restriction of competition ‘by object’ can be applied only to certain types of coordination between undertakings which reveal a sufficient degree of harm to competitionper seeconomic and legal context of which it forms a part”. Specifically, the General Court had not applied the essential legal criterion that “”. The General Court had merely provided reasons why the measures were capable of restricting competition but did not explain how that restriction created anti-competitive harm. At the most, the measures had the object of imposing a financial contribution on certain members of the group but this cannot, by its very nature, be anti-competitive . The Court held that in order to determine whether a measure restricts competition by object, regard must be had, among other things, to the “”. This analysis involves taking into account “all relevant aspects”, which may include the interaction of the relevant market with a different related market; therefore all sides of the multi-sided market relevant to payment card systems. The General Court had confused the issue of considering the entire economic and legal context with the issue of defining the relevant market; it had wrongly held that an analysis of the balance between issuing and acquisition activities could not be carried out in the context of Article 101(1).

In light of the above, the Court found that the General Court’s reasoning had been defective and that it had misinterpreted and misapplied Article 101(1). While the Court acknowledged that “it cannot be ruled out” that the measures do in fact hinder competition from new members, such a finding could only be reached through an examination of the effects of the measures. The Court therefore referred the case back to the General Court for consideration whether, as the Commission found in the decision at issue, the agreements at issue did have as their effect the restriction of competition within the meaning of Article 101(1).


This judgment should have much wider application than just the treatment of payment card systems. It helps to clarify the notion of “by object” restrictions on competition, narrowing it (back) to agreements or concerted practices that are clearly anti-competitive. It may help redress a trend seen across the EU of competition authorities being too quick to place agreements in the “object box”, without conducting a more detailed assessment as to whether agreements do actually appreciably restrict competition in the affected markets.

The Court’s judgment is available here.

MasterCard v Commission (C-382/12 P)

In 2007, the Commission adopted a decision finding that MasterCard's multilateral interchange fees (“MIF”) for cross-border payment card transactions within the EEA violated the Article 101 TFEU prohibition (Article 81 of the EC Treaty as it was at the time). More specifically, the Commission concluded that the MIF, a charge levied on each payment at a retail outlet when the payment is processed, inflated the cost of card acceptance by retailers without leading to proven efficiencies.

For the purposes of the Article 101(1) prohibition, the Commission concluded that the MIF could not be accepted as a legitimate “ancillary restriction”, because it was not objectively necessary for the operation of an open payment card scheme. The scheme could function simply on the basis of the remuneration of issuing banks by cardholders, of acquiring banks by merchants, and of the owner of the scheme by the fees paid by the issuing and acquiring banks. The Commission took the view that the charges levied on merchants by the acquiring banks could (hypothetically) be lower if there were no MIF and a rule prohibiting issuing and acquiring banks from setting the interchange fee after the purchase has been made and the transaction submitted for payment (a prohibition on ex post pricing).

In 2012, the General Court dismissed MasterCard’s appeal and upheld the Commission’s conclusions. On appeal to the Court of Justice, MasterCard argued inter aliaassociation of undertakings that, following its IPO in 2006, it could no longer be considered an “” and that its arrangements in relation to the MIF could therefore not fall within the scope of application of Article 101. The Court rejected that argument, finding that since the IPO, the banks had continued, collectively, to exercise decision-making powers in respect of the essential aspects of the operation of the MasterCard payment organisation, and that the MIF reflected the banks’ interests because there was a commonality of interests between MasterCard, its shareholders and the banks.

On the issue of ancillary restrictions and the proper application of Article 101(1), the Court held the General Court had not erred in law when concluding that the fact that the absence of the MIF might have adverse consequences for the functioning of the MasterCard system does not mean that the MIF was therefore objectively necessary. It did however criticise the General Court for also relying on the Commission’s same “counterfactual hypothesisex postCartes Bancaires” on a prohibition on pricing as the basis for concluding the agreement restricted competition. In contrast to the judgment, the Court concluded that the Commission had nevertheless demonstrated that the MIF had restrictive effects on competition and that MasterCard had not demonstrated that the MIF satisfied the conditions for exemption under Article 101(3).

The Court accordingly dismissed MasterCard’s appeal, bringing to an end a dispute that has spanned more than two decades (it being 1992 when British retailers first complained about being overcharged for cross-border card transactions). The judgment will be welcomed by the retailers that have brought “follow-on” actions for damages against both MasterCard and Visa in various jurisdictions, including the UK. National competition authorities have also been awaiting the judgment: the UK’s Competition and Markets Authority has announced that it will consider the implications of the Court’s judgment for its investigations into MasterCard and Visa’s interchange fee arrangements for UK domestic transactions.

The judgment may also provide momentum for the Commission’s Proposal for a Regulation on interchange fees for card-based payment transactions, which was introduced in July 2013. The Proposal, which is currently going through the EU’s legislative process, introduces a cap on the level of interchange fees at 0.2% for debit card payments and 0.3% for credit card payments.

The court judgment is available here.