EU opens antitrust proceedings against Visa Europe
The European Commission said on Wednesday it had opened antitrust proceedings against Visa Europe Ltd over the interchange fees the company charges for cross-border consumer payment card transactions.
A statement by the European Union executive said Visa Europe, owned by 4,600 banks that have issued 348 million cards, was suspected of breaching EU rules “which forbid restrictive business practices such as price fixing”. Visa Europe said in January it was hoping for a deal with the EU executive to keep its interchange fee on transactions despite a Commission competition ruling in December against rival MasterCard’s interchange fee.
The Commission, which has broad powers to regulate competition in the 27-nation EU, said the initiation of proceedings did not imply it had proof of any infringement, and there was no strict deadline to complete the inquiry. Retailers must pay a multilateral interchange fee (MIF) each time a customer uses a card to make a purchase. The money is retained by the customer’s bank and charged to the merchant’s bank.
The “honor-all-cards rule” obliges retailers to accept all valid Visa-branded cards, irrespective of the identity of the issuer, the nature of the transaction and the type of card. In 2002, the Commission exempted the MIF proposed by Visa International after the global brand-owner offered substantial reforms, gradually reducing the level of its fee. However, the exemption from EU competition rules expired on Dec. 31, 2007 and Visa Europe, which has taken over from Visa International responsibility for the network rules applicable in Europe, is now responsible for ensuring its system fully complies with EU rules, the Commission said. (Reuters)
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