Mastercard, Rivals Face Fines in UK Over Welfare Payments 'Cartel'
March 31 2021 - 6:14AM
Dow Jones News
--U.K. Payment Systems Regulator said Mastercard and two rivals
face fines of more than GBP32 million
--Regulator provisionally found that five companies engaged in
cartel behavior
--Mastercard said it has put further controls and training in
place
By Adria Calatayud
The U.K.'s Payment Systems Regulator said Wednesday that it has
provisionally found that Mastercard Inc. and four rivals engaged in
cartel behavior in a case relating to prepaid cards used by local
authorities to distribute welfare payments.
The regulator said Mastercard, allpay and Prepaid Financial
Services--owned by EML Payments Ltd.--agreed to pay maximimum fines
totaling more than 32 million pounds ($44 million) as part of a
settlement in which they admitted that they took part in the
alleged anticompetitive arrangement.
The PSR said it found these three companies, in addition to APS
and Sulion, infringed competition law by agreeing not to compete or
poach each other's clients. One alleged infringement took place
between 2012 and 2018 and involved all five parties, and another
lasted two years between 2014 and 2016 and involved APS and Prepaid
Financial Services, the regulator said.
"By colluding in this way, we consider the parties were acting
as a cartel," PSR Managing Director Chris Hemsley said.
The regulator said it has sent a statement of objections to the
five parties, which can now make representations on the provisional
findings. The potential fines are subject to the PSR ultimately
concluding that there have been infringements, it said.
Mastercard said it has put further controls and training in
place to ensure the issue--which the company said was isolated to
U.K. prepaid cards--can't occur again, while working with the
regulator to settle the matter.
"Mastercard is committed to upholding all regulatory and legal
standards and we apologise that the actions of two former employees
resulted in the standards expected of us not being met in this
instance," it said.
EML--which completed its acquisition of Prepaid Financial
Services last year--said it has agreed to pay a maximum fine of
around GBP920,000 and that it worked with regulators to solve the
issue. The company said it doesn't expect a financial impact given
that it had withheld GBP5 million from the vendors of Prepaid
Financial Services to settle any financial penalties arising from
the probe.
Allpay said it informed the PSR immediately after it became
aware of potential breaches of competition law and has cooperated
fully with the investigation.
APS said the investigation concerns alleged competition issues
in a market the company exited more than five years ago and which
represented a small proportion of its revenue. The company said it
is confident its activities didn't cause any customer or market
detriment, and that it will continue to cooperate with the
regulator.
Sulion couldn't be reached for comment.
Write to Adria Calatayud at adria.calatayud@dowjones.com
(END) Dow Jones Newswires
March 31, 2021 05:59 ET (09:59 GMT)
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