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ACCC sues Mastercard over anti-competitive retailer deals

Eliza Sayon May 31, 2022

2 min read

The ACCC has instituted Federal Court proceedings against Mastercard over alleged anti-competitive conduct in deals with large retailers, accusing them of substantially lessening competition in debit card acceptance services.

According to the lawsuit, Australia’s consumer watchdog alleged that Mastercard entered into agreements with more than 20 major retail businesses that hindered competition by deterring them from using eftpos.

The ACCC stated that the alleged anti-competitive conduct began in late 2017 in the context of the Reserve Bank of Australia’s least cost routing initiative.

This aimed to increase competition in debit card acceptance services and reduce payment costs for businesses by allowing them to choose whether debit transactions were processed by Visa, Mastercard or eftpos, with eftpos often being the cheapest option.

It was alleged that,t in response to the RBA initiative, Mastercard 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 debit card transactions through Mastercard rather than the eftpos network.

“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,” ACCC chair Gina Cass-Gottlieb said in a statement.

“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. Reducing costs for businesses enables them to offer their customers better prices. Making sure the major card schemes, Mastercard, Visa and eftpos, compete vigorously is important for both those businesses and their customers.”

A Mastercard Australia spokesperson said it is disappointed that the ACCC has gone to litigation and is reviewing what it has filed.

“We have cooperated with the ACCC throughout its investigation and will continue to engage with the Commission, defending our actions to innovate and compete in Australia’s payments market,” the spokesperson said in a statement.

The ACCC is seeking declarations, penalties, costs and other orders.

It said it accepted a court-enforceable undertaking from Visa last year amid concerns it may have limited competition on debit card acceptance through its dealings with large merchants.

With AAP

Eliza Sayon

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Eliza is a content producer and editor at Public Spectrum. She is an experienced writer on topics related to the government and to the public, as well as stories that uplift and improve the community.