The Australian Competition & Consumer Commission (ACCC) has instituted proceedings in the Federal Court against Mastercard Asia/Pacific Pte Ltd and Mastercard Asia/Pacific (Australia) Pty Ltd, for allegedly engaging in conduct with the purpose of substantially lessening competition in the supply of debit card acceptance services.

Mastercard’s alleged anti-competitive conduct commenced in late 2017 in the context of the Reserve Bank of Australia’s least cost routing initiative.

The RBA’s least cost routing initiative aimed to increase competition in the supply of debit card acceptance services and reduce payment costs for businesses by allowing them to choose the lowest cost network to process their transactions. This enabled businesses to choose whether their debit transactions were processed by Visa, Mastercard or eftpos, with eftpos often being the cheapest option.

It is alleged that in response to the least cost routing 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. This meant that these businesses would not process significant debit card volumes through the eftpos network even though eftpos was often the lowest cost provider.

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