Notice pursuant to Article 19(3) of Council Regulation No 17 — Cases COMP/34.324 — Maestro, COMP/34.579 — Europay (Eurocard-MasterCard) and COMP/35.578 — Europay Membership Rules and Licensing (Text with EEA relevance)
Date: 2002-04-13
Institutions: European Commission
Subjects: application of EU law, competition law, electronic money, exchange of information, financial institution, international payment

13.4.2002

EN

Official Journal of the European Communities

C 89/7

Notice pursuant to Article 19(3) of Council Regulation No 17 (1)

Cases COMP/34.324 — Maestro, COMP/34.579 — Europay (Eurocard-MasterCard)

and

COMP/35.578 — Europay Membership Rules and Licensing

(2002/C 89/07)

(Text with EEA relevance)

1. INTRODUCTION

1. Between 1992 and 1995 Europay International SA notified
the Commission of various rules and regulations governing
its international payment cards, in particular its Eurocard-
MasterCard card (in Europe most commonly a deferred
debit/charge card) and its Maestro debit card.
In 1994
the Eurocard-MasterCard notification was extended to the
entirety of
In 1995 Europay Inter-
national notified its Membership and Licensing Rules,
which are applicable to all its products.

the EEA territory.

2. On 23 May 1997 the Commission received a complaint by
EuroCommerce, a retail, wholesale and international trade
representation in the European Union, concerning,
inter
alia, various aspects of the Europay International payment
card scheme.

6. Europay is owned by various financial institutions and by
MasterCard International (3). The shareholders within the
EU are all national payment card companies or other
forms of national associations of banks, together holding
a share of about 80 %. Most EU shareholders are also
Europay members licensed to issue Europay cards and to
acquire merchants for Europay transactions.

7. Europay's Board of Directors decides on the adoption,
modification and amendment of the rules and regulations
relating to the various Europay payment services, approves
applications for membership and licences and sets the level
fallback interchange fees, which the
of the multilateral
merchant bank has to pay to the cardholder bank for
each cross-border Europay purchase transaction, and by
default for domestic transactions for which no distinct
domestic interchange rate has been defined.

2. THE PARTIES

2.1. Europay International

8. Through alliance agreements with MasterCard Europay has
the exclusive rights to manage the Mastercard, Maestro and
Cirrus trademarks, owned by MasterCard, in Europe.

3. Europay International

is a public
(hereafter
limited liability company (‘société anonyme’) incorporated
under Belgian law which was created on 1 September
1992,
following the merger between Eurocard Inter-
national and Eurocheque International (2).

‘Europay’)

4. Europay's aim is to develop and operate payment systems
and related services for the benefit of its licensees. Through
EPS-net, a network which is operated by its subsidiary
European Payment Services SA, Europay provides global
data exchange, authorisation and clearing and settlement
services to its members. Europay itself does not issue cards
to cardholders or acquire merchants for card acceptance,
but its members do. Europay has over 7 000 members.

5. Europay has developed ‘pay before’ (eurotravellers cheques
and CLIP electronic purses),
(eurocheques,
Maestro cards) as well as ‘pay later’ products (Eurocard-
MasterCard).

‘pay now’

(1) OJ 13, 12.2.1962, p. 204/62.
(2) Europay International has informed the Commission that Europay
International and MasterCard International are expected to integrate
into a new unified shareholder-owned corporation. The integration
of the two organisations is expected to be completed in the first
quarter of 2002.

2.2. Europay members

9. Europay members must be credit institutions or entities
owned by credit institutions; however credit institutions
or entities and their subsidiaries which are competing
international payment systems or which are more than
50 % owned or controlled, directly or indirectly, by a
competing international payment system, are not eligible
for membership. All members have to sign the Europay
Membership and Licence Agreement. A separate product
licence is required for each Europay-licensed product that
members want to issue and acquire. There are two main
types of licence in the Europay system: a principal licence
and an affiliate licence. The holder of a principal licence will
deal directly with Europay and may propose affiliate
licensees to Europay. The principal licensee is jointly and
severally liable for the transactions of its affiliate licensees.

(3) MasterCard International

is currently a non-profit, non-stock,
membership corporation incorporated in the State of Delaware,
USA, and the owner and manager of a worldwide payment card
system and a travellers cheque system. MasterCard currently holds
12,25 % of the Europay shares. After the completion of the inte-
gration of Europay International and MasterCard International (see
footnote 2), the new holding company, MasterCard Inc. will hold
the shares in MasterCard International. All principal
100 % of
members of Europay
in
MasterCard Inc.

International will be

shareholders

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Official Journal of the European Communities

13.4.2002

3. THE MARKET

3.1. The functioning of the Europay card system

10. The Europay notifications concern the operation of
payment card systems. Broadly speaking, Europay cards
can be used either to purchase goods or services or to
obtain cash, either from a bank counter or from an
the
In the first case four parties are involved:
ATM.
Europay cardholder, the issuing bank (which issues the
card to the cardholder), the merchant, and the acquiring
bank (which acquires merchants
card
acceptance). In the case of a ATM transaction there are
only three parties involved: the Europay cardholder, the
issuing bank and the ATM operator.

for Europay

3.2. Inter-system competition

11. Apart

from Europay,

there are currently the following
major international payment organisations active on the
European market: Visa International, Japan Credit Bureau
(JCB) and the international proprietary systems American
Express and Diners Club International. MasterCard Inter-
national is active in Europe under the terms of its alliance
these international payment organi-
with Europay. Of
sations Visa is by far the most important competitor of
Europay in Europe. Together Visa and Europay account for
around 90 % of international cards issued in the EU. Visa
is in particular strong in the UK, Spain and France.
Europay on the other hand is stronger in Germany, the
Netherlands and Austria.

12. Apart from international payment card operators various
national payment card operators are also active in the
different Member States.

3.3. Intra-system competition

Issuing Europay cards

13. Originally Europay had one sole member in each Member
the years the situation has
State issuing cards. Over
changed in most Member States and other members,
either principal or affiliate, were nominated. Nowadays,
the market for issuing Europay cards is competitive:
in
all Member States there are several issuers.

MasterCard. These exclusivities have however de facto been
abolished since May 2000 (see below). In Belgium, Greece,
the Netherlands and Spain the exclusive rights of
the
Europay members were relinquished in May 1993. It is
only recently that other Europay acquirers have entered
these markets, which explains why,
these
markets are still dominated by the formerly exclusive
Europay members. Also other Member States, such as
Luxembourg, Portugal and Finland are de facto dominated
by one Europay acquirer.

in practice,

4. THE AGREEMENTS

4.1. General

15. The notifications by Europay concern the rules and regu-
lations governing Europay International and its members
(that is, the Europay Membership and Licensing Rules) as
well as the international provisions relating to various
(the MasterCard Bylaws and
Europay payment cards
Rules, the Eurocard Rule Book and the Maestro manual,
European region).
the notification covers
licence agreements and the
various
standard Membership
Licence Agreement. All
notified Europay arrangements will hereafter be referred
to as the ‘Europay Rules’.

standard product

In addition,

and

16. The Europay Rules govern primarily the relationship
between Europay and its members, meaning banks
and acquiring merchants
issuing Europay cards
for
Europay card acceptance.
In addition, the notified rules
also contain clauses relevant for the relationship between
those Europay members
(the inter-bank relationship).
Moreover, the Rules contain clauses with regard to the
relationship between acquiring banks and merchants
(such as the so-called ‘No-discrimination’ Rule and the
‘Honour all cards’ Rule).

4.2. Specific provisions

17. This notice only concerns the specific provisions detailed
below. In particular,
it does not cover any interchange
fees (1) laid down in any of the notified agreements, nor
does it cover any rules relating to ATM cash withdrawal
cards or functions.

Acquiring merchants for Europay card-acceptance

14. Intra-system competition on the acquiring market on the
other hand is less intense: in four Member States, namely
Austria, Denmark, France and Germany, Europay acquirers
still formally hold exclusive rights for acquiring Eurocard-

4.2.1. The No-discrimination Rule (NDR)

18. According to the Europay Rules, merchants are prohibited
to add any charges to cardholders who pay with their
Eurocard-Mastercard
and/or Maestro card. However,
discounts for payments by cash are allowed.

(1) See paragraph 7 of this notice.

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Official Journal of the European Communities

C 89/9

4.2.2. The principle of territorial licensing

19. As a general rule a Europay member is only allowed to
issue Europay payment cards that are linked to accounts
domiciled within its area of use. Moreover, a Europay
member may only acquire transactions that have taken
place within this area. The area of use is defined by
Europay as
territory in which the
member is licensed to use a particular Europay trademark,
which is usually a single country. A Europay member can
make an application for an additional licence for issuing
and acquiring in any other territory, where it has the right
to carry on its activities in the field of payment systems.

the geographical

some countries (see below) have, since May 2000, de
facto relinquished their exclusive acquiring rights, they no
longer have the power to block cross-border activities. In
addition, since January 2001, Europay allows its members
from any merchant,
to acquire centrally transactions
located in western Europe, including all countries in the
European Economic Area (so-called ‘central acquiring’).
Initially, central acquiring was possible for international
airlines only, but gradually Europay has enlarged the
international merchants which could be
categories of
centrally acquired to, since January 1999, all international
merchants. In December 2000 the Board of Directors of
Europay decided to liberalise the merchant criteria for
central acquiring in western Europe. Since January 2001
it is possible to acquire centrally transactions from any
merchant located in western Europe,
irrespective of the
number of countries in which the merchants has outlets.

4.2.3. The Europay Rules on cross-border issuing (1)

20. There are some specific exceptions on the principle of
territorial licensing for Eurocard-MasterCard. Passive cross-
border issuing is allowed, as is issuing to citizens of any
country for which the member holds a licence, regardless
of their country of residence, and under certain conditions
cross-border issuing of corporate cards to employees of
multinationals is possible. Moreover, Europay members
can carry out cross-border issuing activities without limi-
tation, provided that an additional licence for the intended
country of issuance has been obtained and that the cards
are issued under the corresponding licence. Europay does
not require the establishment of a branch or subsidiary in
the additional area of use. Furthermore, Europay has
clarified that under its rules the issuance of a Eurocard-
MasterCard card is not linked to the holding of a bank
account within the area of use; only a card account (a
mere reference number that
is used for the billing of
expenses linked to the use of the credit cards concerned)
must be opened with the cross-border issuer.

4.2.5. The modified exclusivities rules

single

given a

Iceland
licensee

France, Germany,

22. In some countries within the European Economic Area
and
(Austria, Denmark,
an
Norway), Europay has
it
exclusive Eurocard-MasterCard licence, which gives
to acquire Eurocard-MasterCard trans-
exclusive rights
actions. Although these exclusive rights will
formally
remain in place, Europay has agreed with its members
through an addendum to the exclusive licence agreements
that since 1 May 2000 (3), any Europay member may
apply in these countries for a so-called special affiliate
acquiring licence, by which the exclusive right of
the
Europay licensees in the countries concerned comes de
facto to an end.

4.2.4. The Europay Rules on cross-border acquiring (2)

21. Pursuant to the Europay Rules cross-border acquiring is
allowed, provided that an additional
the
country where acquiring is intended, has been obtained.
Europay does not require the establishment of a branch or
subsidiary in the additional area of use. Since the
in
remaining exclusive Eurocard-MasterCard licensees

licence for

(1) Cross-border issuing is defined as the issuing of cards to cardholders
residing in a country other than the country in which the issuing
bank is physically established.

(2) Cross-border acquiring is defined as the acquiring of transactions
from merchants located in a country other than the country in
which the acquiring bank is physically established. It also includes
central acquiring.

4.2.6.

‘No acquiring without issuing’ Rule

23. Initially, Eurocard-MasterCard principal

licensees were
obliged to issue either directly or indirectly through their
affiliates a reasonable number of cards in each area of use
for which they are licensed. In December 2000 the Board
of Directors of Europay decided to relax this rule within
western Europe. Since 1 May 2001, a principal licensee is
only required to issue a reasonable number of cards in a
minimum of one country for which it holds a licence.

(3) The Addendum to the exclusive licence agreements, by which these
amendments were made, will enter into force in Norway at the
latest by 1 May 2002.

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Official Journal of the European Communities

13.4.2002

the principal

24. The number of Eurocard-MasterCard cards that must be
issued and maintained is set out in the principal licensee's
consolidated business plan and is based on, inter alia, the
size and capabilities of
licensee and its
affiliates and of the characteristics of the market and the
area of use. Moreover, principal licensees that wish to start
acquiring businesses must be able to demonstrate that
their card issuance programme has been irrevocably
launched and that
their
subsidiaries have issued a number of cards which is
consistent with the business plan approved by Europay.
According to the amended Europay Rules, a member
that holds licences for more than one western European
country has to meet these requirements in only one such
country.

they and/or one or more of

4.2.7. The ‘honour all cards’ Rule

valid

Eurocard-MasterCard

25. Merchants are obliged to honour without discrimination
all
cards when properly
presented as payment by customers for transactions, and
to maintain a policy of not discriminating among
customers seeking to make purchases through use of a
Eurocard-MasterCard. Merchants must honour without
discrimination all valid Maestro cards when properly
presented as payment from customers for transactions.

5. CONCLUSION

26. In view of

it

the preceding paragraphs,

the Commission
intends to adopt a favourable position concerning the
provisions in the notified agreements referred to above.
Before doing so,
invites interested third parties to
submit their observations within one month of the publi-
cation of this notice in the Official Journal of the European
Communities.
Interested third parties are requested to
their observations contain
indicate which passages of
business secrets or other confidential material, which in
their opinion ought not
to be divulged, and to state
their reasons. In the event of such an indication being
interested parties are requested to submit both a
made,
confidential and a non-confidential version of their obser-
vations. These observations should be submitted quoting
reference cases COMP/34.324 — Maestro, COMP/34.579
— Eurocard-MasterCard, COMP/35.578 — Europay
Membership Rules and Licensing, by post to:

European Commission,
Directorate-General Competition,
Direction D, Unit D1 (Financial Services)
B-1049 Brussels,
or by fax (32-2) 296 98 07.

Authorisation for State aid pursuant to Articles 87 and 88 of the EC Treaty

Cases where the Commission raises no objections

(2002/C 89/08)

(Text with EEA relevance)

Date of adoption of the decision: 27.2.2002

Member State: Italy (Venezia)

Aid No: N 599/A/01

Other information: Requirement
report to the Commission

to submit

implementing

The authentic text(s) of the decision, from which all confi-
dential information has been removed, can be found at

Title: Housing aid for non-Community workers

http://europa.eu.int/comm/secretariat_general/sgb/state_aids

Objective: To provide housing for non-Community workers

Legal basis: Deliberazione della Giunta regionale n. 2801 del 3
agosto 1999 e altri progetti di deliberazione della Giunta re-
gionale

Date of adoption of the decision: 5.3.2002

Member State: Italy (Calabria)

Budget: EUR 1 934 433,63

Aid No: N 648/2000

Aid intensity or amount: Estimated to be
EUR 10 000 per firm

less

than

Title: Regional aid scheme for large firms (measures under the
2000-2006 regional operational programme)

Duration: 36 months

Objective: Regional development