(CN) - The European Parliament and Council of the European Union agreed Thursday to a cap on fees that credit card companies charge to merchants, a culmination of years of antitrust investigations and court battles in the EU.
Acting on a proposal put forth by the European Commission nearly 18 months ago, EU lawmakers agreed to cap the fees that credit card companies like Visa and MasterCard charge to merchants for accepting credit and debit cards as payment, known as interchange or interbank fees.
Retailers pass the hidden charges on to consumers, leading to higher prices across the continent. But neither retailers nor their customers have any influence on the fees - hence the legislation, according to the commission.
Additionally, both the EU's lower court and the European Court of Justice have ruled that the MasterCard's interchange fees violate antitrust laws. In 2012, the General Court rejected MasterCard's claim that without the fees it would be forced to cut cardholder benefits or find other ways to raise the lost revenue.
Earlier this year, the EU high court affirmed the lower court's ruling, finding that "objective necessities" - even for the fiscal health of a behemoth like MasterCard - do not justify anticompetitive effects of the fees.
The commission hailed the lawmakers' agreement, which regulators said will finally bring legal certainty to the banking industry.
"This legislation is good for consumers, good for business, and good for Europe," said competition commissioner Margrethe Vestager. "It will lead to lower prices and visibility of costs for consumers. It reduces a 'tax' levied on business by banks in the form of interchange fees, and releases the brakes that have so far held back innovation."
Visa already agreed to cut its interchange fees earlier this year to end its own antitrust woes with the commission.
The full parliament and council must approve the legal text of the bill, which is still being drafted. A vote is expected early next year.
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