By CCN.com: The European Commission on Tuesday slammed Mastercard with a 570.6 million euro ($650 million) fine after finding the company guilty of breaching antitrust rules. According to information released by the EU regulatory body, the original fine was reduced by 10 percent because Mastercard cooperated with the Commission during the investigation.

Mastercard Overcharged Customers, Colluded against Merchants

Mastercard, which is the second biggest card brand in the European Economic Area, forced acquiring banks to apply the interchange fees of the country where the retailer was located. These practices restricted merchant options and stopped them from finding other cards with friendlier transaction fees.

Prior to December 2015, interchange fees in the EEA varied widely between countries. In December 2015, the EU capped interchange fees at a maximum of 0.2 percent of total transaction value and 0.3 percent of transaction value for debit and credit cards respectively. This interchange fee regulation reduced retailers’ costs by a significant margin that reflected in the cost of items.

EC Investigation and Half-a-Billion Dollar Fine

In 2013, regulators opened a formal investigation into Mastercard to determine if its acquiring rules breached any of the antitrust laws of the EU. After its investigations, the Commission determined that Mastercard’s rules racked up more costs for both retailers and consumers as the retailers had to pay more bank charges which then translated to higher cost of items.

The Commission determined that if Mastercard’s rules were nonexistent, retailers would have the opportunity to enjoy lower bank rates from countries with lower interchange fees, which would then lower costs for card users and non-card customers alike.

In a statement released on Tuesday, Margrethe Vestager, the commissioner in charge of competition policy said:

European consumers use payment cards every day, when they buy food or clothes or make purchases online. By preventing merchants from shopping around for better conditions offered by banks in other Member States, Mastercard’s rules artificially raised the costs of card payments, harming consumers and retailers in the EU.

The Commission arrived at the 570 million euro figure based on the duration of the infringement, the amount of sales recorded during the infringement period and Mastercard’s level of cooperation during the investigation. In return for admitting to infringement of EU antitrust and competition rules, Mastercard received a 10 percent fine reduction.

It will be recalled that in July 2018, Google was handed a $5 billion fine by the European Commission after also being found guilty of engaging in non-competitive behaviour by forcing manufacturers to make Chrome and Google Search the default search tools on Android devices.

In any case, the fine didn’t seem to have much of an effect on Mastercard’s share price. MA shares dropped by 1.26 percent to $199.46, which was somewhat better than the 1.42 percent decline seen in the broad S&P 500 index.

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