Supreme Court Orders 1 Major Relook at Banking Competition

On August 30, 2024, the Supreme Court annulled a previous decision made by the Competition Commission of Mauritius (CCM) concerning the banking card sector, particularly involving major players MasterCard and Visa. This ruling came in response to an appeal filed by MasterCard International Incorporated, which challenged the legitimacy of the CCM’s findings dating back to June 14, 2019.

The core issue revolved around interchange fees, specifically the Issuer Interchange Fee (IIF) that is charged by MasterCard and Visa.

These fees represent the costs incurred when a merchant’s bank compensates the cardholder’s bank during a transaction.

Back in 2012, the CCM initiated an investigation into this area and reached the conclusion that the interchange fee rates could potentially harm competition within the sector.

In response, the Commission implemented a cap on these fees, limiting them to 0.5% for a five-year period.

MasterCard International disputed this ruling, asserting that the CCM had failed to consider its arguments sufficiently and had not provided clear justifications for its conclusions.

Judges Aruna Devi Narain and Veronique Kwok Yin Siong Yen sided with MasterCard, noting that the CCM’s reasoning was not detailed enough to warrant its decision.

The Supreme Court emphasized the legal obligation of the CCM to offer clear explanations, especially in complex cases such as these.

As a result of this ruling, the court has ordered the CCM to conduct a thorough reexamination of the matter.

This will include organizing a new hearing that takes into account MasterCard International’s concerns and evaluates all relevant evidence.

In light of their decision regarding MasterCard, the judges also dismissed two similar appeals from Visa Worldwide Pte Limited and BCP Bank (Mauritius) Limited, previously known as Banque des Mascareignes Ltd.

The outcome of this ruling is expected to have significant implications for the banking card sector in Mauritius, impacting how interchange fees are regulated moving forward.

Source: Defi Media