Mastercard’s Interchange Fees Investigated by Serbian Antitrust Watchdog

The Serbian national competition authority (NCA) – the Commission for Protection of Competition – has launched an investigation against Mastercard. According to a statement published on the NCA’s website, the watchdog is investigating whether Mastercard’s interchange fees applicable in Serbia amount to an illegal restrictive agreement under Serbian competition law.

The NCA has opened formal proceedings against three Mastercard entities: Мastercard Incorporated (USA), Mastercard International Incorporated (USA), and Mastercard Europe S.p.r.l. (Belgium). The watchdog is alleging that these three entities, acting as an association of undertakings, have been setting the minimum amounts of interchange fees in Serbia at a level several times higher than in the EU – in contravention of the Serbian competition regulations.

The NCA further stated how it has reasonably assumed that, by setting the minimum amounts of interchange fees, Mastercard has restricted competition between the acquiring banks, as they cannot set a merchant fee at a level lower than the interchange fee. In turn, such a practice may adversely affect consumers, if the merchants increased their retail prices due to unfairly high interchange fees.

Apart from restricting competition between the acquiring banks, the NCA noted how Mastercard’s practices could also have had a negative effect on competition between the card issuing banks, if the banks were incentivized to offer the payment cards the usage of which is subject to the highest interchange fee rate.

If the investigation would show that Mastercard’s practices indeed run afoul of the Serbian competition legislation, Mastercard could face a fine of up to 10% the relevant annual turnover in the previous year (2017). Since the Serbian NCA is treating Mastercard as an association of undertakings, the maximum amount of fine would be 10% of the combined annual turnover of all undertakings which are part of the association.