Who is the Master of Mastercard? credit card blockades

A blockade on WikiLeaks payments processor DataCell by Visa, MasterCard and American Express is unlikely to violate EU competition rules.  MasterCard, Visa and American Express, among others, stopped processing payments for WikiLeaks when it started releasing about 250,000 secret US diplomatic cables in 2010. This made it hard to raise funds, and WikiLeaks has said the blockade resulted in a 95 percent donations reduction, which cost the organisation more than US$50 million.

DataCell, the company that processed WikiLeaks donations until the blockade started, last year filed a complaint with the European Commission, suggesting the blockade is a violation of European competition rules.  The Commission, however, does not think that is the case. “On the basis of the information available, the Commission considers that the complaint does not merit further investigation because it is unlikely that any infringement of EU competition rules could be established,” an official of the European Commission said in an email on Tuesday.

he Commission said it looked at the impact of the blockade on DataCell and at the impact on the markets in which it operates. “It appears that DataCell is not prevented from accepting card payments for its own services or for the benefit of other parties; it is only payments for the benefit of WikiLeaks that DataCell cannot process. It seems unlikely that this would lead to harmful effects to competition and to consumers on the payment services markets concerned,” the official said.  It is unclear when the Commission will issue a final decision. “We never announce that in advance,” the official said.

WikiLeaks’ founder, Julian Assange, was displeased with the news. “These companies should not have the power to impose an economic death penalty,” he said during a news conference that was available via a live video link in Brussels. Assange is in self-imposed political asylum in the Ecuadorian embassy in London to avoid being extradited to Sweden, where he is wanted for questioning related to accusations of committing sexual offenses…

While the European Commission is unlikely to decide the payment blockade against WikiLeaks violates competition laws, the European Parliament last week called for legislation to regulate credit card companies’ ability to refuse service to organizations such as WikiLeaks. The Parliament voted in favor of a text that “considers it to be in the public interest to define objective rules describing the circumstances and procedures under which card payment schemes may unilaterally refuse acceptance.” [see European Parliament resolution of 20 November 2012 on ‘Towards an integrated European market for card, internet and mobile payments’ (2012/2040(INI))

“Visa can set the rules of the market”  The Commission will be asked to consider the text for laws limiting the rights of credit card companies to refuse service.  “The Commission’s assessment to not even investigate is in total opposite direction of the political will,” said Andreas Fink, CEO of DataCell, in an email. Fink read the preliminary report send to him by the Commission.

“It basically sounds like they were hunting for an excuse to not have to investigate it,” he said. The Commission essentially reasoned that one less small player in the market doesn’t change the market mechanics, while the intention of competition rules is to avoid powerful, monopoly-like players like Visa dictating to the market, Fink said…. adding that when Visa ordered service providers to stop DataCell payments to WikiLeaks in Iceland, MasterCard and American Express transactions were automatically canceled as well.  “So Visa can set the rules of the market,” dictating to other credit card companies, Fink said. “This is competition control at its finest,” he said, calling the situation “absurd.”

Credit card blockade of WikiLeaks donations likely to be legal, EU says, Computerworld, UK, Nov. 28, 2012

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