Collective agreement harmed competition and passed costs onto consumers.

The OFT has found that a collective agreement amongst the owners of MasterCard restricted competition.

The agreement fixed the level of intercharge fee - a fee levied by the
credit card company on the banks of the retailers in respect of each
individual credit card transaction - and in so doing discouraged
retailers' banks from negotiating their own intercharge fees.

Further, the agreement set the intercharge fee at a level that would
allow MasterCard to recoup costs not associated with the specific
transactions, for example, the costs incurred by MasterCard in issuing
introductory interest-free periods on new credit cards.  These
extraneous costs would ultimately be passed on to all consumers, even
those not using credit cards to make purchases. OFT Chairman Sir John
Vickers said, "This unduly high intercharge fee was like a tax on UK
consumers."

While the agreement in question was in place from March 2000 to
November 2004, the OFT is concerned that MasterCard's new intercharge
fee arrangements may also allow for the recouping of extraneous
costs.  Unless MasterCard addresses these concerns, the OFT
expects to start a further investigation.

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