Final Report of the Hearing Officer (1)

Case AT.40049 — MasterCard II

(2019/C 300/03)

Introduction

(1) The present report is made in connection with a draft commitments decision under Article 9 of Council Regulation (EC) No 1/2003 ( 2 ) (the ‘Draft Decision’) which is addressed to Mastercard Incorporated, Mastercard International Incorporated and Mastercard Europe SA (together ‘Mastercard’).

(2) The Draft Decision concerns one of the two aspects of the Mastercard card payment system ( 3 ) that are covered by Case AT.40049: Mastercard’s rules on ‘inter-regional’ multilateral interchange fees (‘MIFs’ ( 4 ) ) applicable to card-based inter-regional transactions concluded at merchants located in the European Economic Area (‘EEA’) with consumer debit and credit cards issued by an issuer located outside the EEA. ( 5 )

(3) The other aspect of Case AT.40049 has been addressed by Commission Decision C(2019) 241 final, dated 22 January 2019, which concerns Mastercard’s previously applicable rules concerning ‘cross-border acquiring’ within the Mastercard system. ( 6 )

Procedure concerning inter-regional MIFs

Investigative stage

(4) On 9 April 2013, the Commission initiated proceedings in Case AT.40049.

(5) Between April 2013 and December 2014, the Commission sent several requests for information to Mastercard.

(6) In April and May 2014, the Commission sent requests for information to over 40 acquirers concerning their activities in 10 EEA countries. ( 7 ) The questionnaires used, as well as the responses to them, have together been referred to in Case AT.40049 as the ‘Acquiring Survey’. In May 2014, the Commission sent questionnaires to 33 acquirers seeking acquiring margin data not obtained in the context of DG Competition’s ‘Cost of Payments Study’ (AT.40194 ( 8 ) ). These questionnaires, together with the responses to them, have been referred to in Case AT.40049 as the ‘Cost Study Survey’.

(7) The Commission adopted a statement of objections on 9 July 2015 (the ‘SO’) covering both aspects of Case AT.40049. The SO was notified to Mastercard on 13 July 2015.

Access to the file (9)

(8) On 24 July and 3 August 2015 respectively, Mastercard received access to the non-confidential part of the investigation file in Case AT.40049 by means of two separate CD-ROMs.

(9) By letters dated 7 and 17 August 2015, Mastercard requested additional access to, in particular, the Acquiring Survey and the Cost Study Survey. Mastercard also sought access to certain documents prepared by a consultancy that had assisted DG Competition with the Cost of Payments Study (the ‘Consultancy Documents’). In September 2015, Mastercard raised issues concerning the extent of redactions applied to materials on the first two CD-ROMs and the organisation and cataloguing of the part of the investigation file accessible via those CD-ROMs.

(10) DG Competition dealt with these requests from Mastercard. In particular, DG Competition organised a data room procedure whereby certain of Mastercard’s external advisers could access, in a data room (the ‘Data Room’), information obtained in the context of the Acquiring Survey, the Cost Study Survey and the Cost of Payments Study, albeit in anonymised form where relevant (the ‘Data Room Procedure’). DG Competition also clarified certain cataloguing issues in connection with the material contained on the first two CD-ROMs and provided a third CD-ROM on 28 September 2015 containing, in native spreadsheet format, certain Cost of Payments Study data that had been provided in scanned format on the earlier CD-ROMs. After initially refusing access to the Consultancy Documents, DG Competition subsequently agreed to include them in the Data Room Procedure.

(11) Mastercard’s external advisers had access to the Data Room for 15 working days in February and March 2016. As foreseen under the Data Room Procedure, they prepared a report for Mastercard’s attention (the ‘Data Room Report’). DG Competition reviewed this report in draft form, releasing a provisional, redacted version of the Data Room Report on 18 March 2016. In the corresponding cover letter, DG Competition explained why it had applied relatively extensive redactions to the detail of a particular section of the Data Room Report (the ‘Redacted Detail’). DG Competition also explained that it would have to seek the agreement of relevant information providers to the inclusion of certain quotes and other information included in the final Data Room Report (the ‘Outstanding Passages’).

(12) On 23 March 2016, Mastercard objected to me about DG Competition’s refusal to include the Redacted Detail in the released version of Data Room Report. Mastercard did not raise the matter of the Outstanding Passages with me.

(13) In my decision dated 6 April 2016, I disagreed with DG Competition’s assessment of the Redacted Detail as business secrets or other confidential information. It did not appear possible for Mastercard to identify, on the basis of the relevant section of the Data Room Report, underlying confidential information. I also disagreed with the position taken in DG Competition’s letter of 18 March 2016 that the Redacted Detail amounted to ‘other confidential information’ since, once proceedings in Case AT.40049 are terminated, Mastercard might use the Redacted Detail in national damages actions, and thus possibly in a manner contrary to the interests of any merchants having contributed data to the Cost of Payments Study that might be involved in such damages actions. I considered that, once Commission antitrust proceedings have been terminated, neither Regulation (EC) No 773/2004 ( 10 ) nor the ‘Damages Directive’ ( 11 ) preclude the use of information such as the Redacted Detail, obtained in the course of access to the file in those proceedings, for defensive purposes in national litigation for the application of Article 101 TFEU.

(14) On 7 April 2016, DG Competition made available to Mastercard the full text of the section of the Data Room Report that contains the Redacted Detail. DG Competition released the Outstanding Passages in instalments, so that by 22 April 2016 Mastercard had received access to the Data Room Report in full.

Time limit for responding to the SO (12)

(15) The cover letter accompanying the SO granted Mastercard eight weeks in which to respond in writing to the SO. In its letter of 7 August 2015 requesting additional access to the file, Mastercard stated its view that this period had not yet started to run. In a letter of 10 September 2015 proposing the Data Room Procedure, DG Competition set a deadline for Mastercard’s written response to the SO (the ‘SO Response’) that would expire 20 working days after the first day of access to the Data Room. Following Mastercard’s observations on the Data Room Procedure, DG Competition modified this deadline so that it would fall 25 working days ‘from the beginning of the starting date of the Data Room’. When releasing the provisional, redacted version of the Data Room Report on 18 March 2016, DG Competition reset the deadline for the SO Response to 8 April 2016.

(16) By its letter to me of 23 March 2016, Mastercard requested an extension of this deadline, arguing that it was not possible to divorce the then inaccessible Redacted Detail from the SO Response as a whole.

(17) By decision of 6 April 2016, I extended the period for submitting the SO Response so that the deadline fell two weeks following the day DG Competition made the Redacted Detail available to Mastercard. I explained that it would have been inappropriate for me to make this deadline subject to the provision of the Outstanding Passages, given uncertainty over whether, and if so when, they would be provided.

(18) Mastercard submitted its written response to the SO on 21 April 2016, respecting the deadline I had set. After DG Competition released, on 22 April 2016, the final instalment of Outstanding Passages, Mastercard supplemented the SO Response and submitted an updated version of it on 6 May 2016.

Interested third persons

(19) I admitted Visa Europe as an interested third person in Case AT.40049 on 4 August 2015.

(20) On 29 January 2016, I admitted Visa Inc. and Visa International Service Association as an interested third person. They had applied and were represented as a pair.

(21) On 19 May 2016, I admitted a financial institution as an interested third person, explaining in my admission decision why that institution’s request to participate in an oral hearing had come too late for me to be able to accede to it.

Oral hearing

(22) Mastercard developed its arguments at an oral hearing held on 31 May 2016. The two interested third persons representing the Visa card payment system ( 13 ) took part.

Commitments procedure

(23) On 26 November 2018, Mastercard submitted commitments (the ‘Commitments’) to the Commission in accordance with Article 9 of Regulation (EC) No 1/2003.

(24) Official Journal of the European Union pursuant to Article 27(4) of Regulation (EC) No 1/2003, summarising the present case and the Commitments and inviting observations on the Commitments within one month. On 5 December 2018, the Commission published a notice in thepursuant to Article 27(4) of Regulation (EC) No 1/2003, summarising the present case and the Commitments and inviting observations on the Commitments within one month. ( 14 ) On 29 January 2019, the Commission informed Mastercard of third party observations received following that notice.

Concluding remarks

(25) The Draft Decision states that in the light of the Commitments, ‘the Commission considers that there are no longer grounds for action on its part and, without prejudice to Article 9(2) of Regulation (EC) No 1/2003, the proceedings in this case should therefore be brought to an end’.

(26) Overall, I consider that the effective exercise of procedural rights has been respected.

Brussels, 11 April 2019. Wouter WILS

(1) Pursuant to Articles 16 and 17 of Decision 2011/695/EU of the President of the European Commission of 13 October 2011 on the function and terms of reference of the hearing officer in certain competition proceedings (OJ L 275, 20.10.2011, p. 29) (‘Decision 2011/695/EU’).

(2) Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (OJ L 1, 4.1.2003, p. 1) (‘Regulation (EC) No 1/2003’).

(3) In a ‘four-party’ payment system such as the Mastercard system, the parties involved in each purchase made by payment card are, besides the owner/licensor of the system: (1) the cardholder; (2) the financial institution which issued that card (referred to as the ‘issuer’); (3) the ‘merchant’; and (4) the financial institution providing the merchant with services enabling it to accept the card as a means of settling the transaction concerned (referred to as the ‘acquirer’).

(4) MIFs are sums that, in respect of transactions settled by way of a card payment in payment system such as the Mastercard system, are typically payable to the issuer by the acquirer in default of an alternative ‘interchange’ arrangement made bilaterally between issuer and acquirer in respect of the type of card and transaction concerned. MIFs are generally expressed in terms of a percentage of the face value of the associated card payment.

(5) See footnotes 3 and 4 for brief explanations of the terms ‘MIFs’, ‘merchants’ and ‘issuer’.

(6) Concerning the procedure leading to that decision, see Final Report of the Hearing Officer, dated 18 January 2019, in Case AT.40049 — MasterCard II (OJ C 185, 29.5.2019, p. 8).

(7) Austria, Belgium, France, Germany, Italy, The Netherlands, Poland, Spain, Sweden and the United Kingdom.

(8) Survey of merchants’ costs of processing cash and card payments, the final results of which were published by DG Competition on 18 March 2015

(http://ec.europa.eu/competition/sectors/financial_services/dgcomp_final_report_en.pdf).

(9) Paragraphs 8 to 18 of the present report provide more detail than the corresponding paragraphs 6 to 10 of the Final Report mentioned in footnote 6 above. This is because the information covered by Mastercard’s relevant requests to the Hearing Officer for additional access and time relates more to MIFs than to Mastercard’s previous cross-border acquiring rules.

(10) Commission Regulation (EC) of 7 April 2004 relating to the conduct of proceedings by the Commission pursuant to Articles 81 and 82 of the EC Treaty (OJ L 123, 27.4.2004, p. 18) as amended.

(11) Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union (OJ L 349, 5.12.2014, p. 1).

(12) See footnote 9 above.

(13) See paragraphs 19 and 20 above.

(14) Communication from the Commission published pursuant to Article 27(4) of Council Regulation (EC) No 1/2003 in Case AT.40049 — MasterCard II (OJ C 438, 5.12.2018, p. 11).