Food Retail Associations Praise European Action on Interchange Fees

CHRISTINA VEIDERS

ARLINGTON, Va. — Tim Hammonds, president and chief executive officer of Food Marketing Institute, told SN the ruling by the European Commission yesterday that credit and debit card interchange fees charged by MasterCard are illegal sets a precedent for Congress to do the same for bank interchange fees in the United States. “Our contention has been that the interchange fee scheme is an illegal cartel violating U.S. antitrust laws and after a great deal of investigation the [European Union] has concluded exactly that for European competition laws.” In abolishing the fees, Hammonds said the commission makes two powerful points: Fees must reflect the actual cost of services delivered, and benefit all consumers. Under the current system, interchange fees, which Hammonds said have built-in marketing costs and profits, are ultimately passed onto consumers, including those who pay by cash. While the commission’s action was specifically on MasterCard, it also will apply to Visa after a preexisting exemption expires at the end of the year. Hammonds anticipates that Congress will act on the issue next year, following extensive investigative hearings.
National Grocers Association, also based here, said the ruling goes a long way in correcting abuse against consumers. Tom Zaucha, NGA’s president and CEO, said in a written release, “The decision by the E.U. is a win for consumers and clearly reinforces action taken by other countries such as Australia and Great Britain that have reduced credit and debit card interchange fees. … Clearly the message that is being heard around the world should be heard in the United States: The anticompetitive interchange fee system by MasterCard and Visa is in need of serious reform.” NGA has joined others in lawsuits against credit card companies and banks, charging that interchange fees are fixed in violation of the antitrust laws.
Meanwhile, MasterCard said it plans to appeal the commission’s ruling.

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