Yesterday 17th November 2021, Amazon.com announced that from 19.01.2022, it will no longer accept Visa Inc. credit cards issued in the UK. Citing high costs of transactions, Amazon released a press statement:
‘As a result of Visa’s continued high cost of payments, we regret that Amazon.co.uk will no longer accept UK issued Visa Cards as of 19.01.2022’.
Since leaving the EU, UK card issuers are no longer subject to the EU cap on card charges.
The UK government has come under pressure to re-negotiate the EU/UK trade agreement. The CMA has been asked by interested parties to review UK card issuers charges.
In October 2020 (20.10.2020 Simon Read – BBC), the BBC reported that the British Retail Consortium were complaining that UK card issuers (Barclaycard VISA and MasterCard) had doubled their charges in the two years 2018 to 2020.
It must be pointed out that both companies have disputed the BBCs findings, but the Amazon decision adds market punch to press investigations.
To the voices of the BRC have been added those in the hospitality and retail industries.
Where does this leave us in terms of Competition Law? The BRC estimates that the market share of Visa and MasterCard is 98% of the UK credit card market. The BRC research also indicates that their cash transaction costs come to £1.42, debit charges at £5.88 while credit card transaction costs come to £18.40.
Under chapter 2 of the Competition Act 1998 it is unlawful for any commercial undertaking with a dominant position within a market place to distort the market in such way to abuse that position and distort competition.
The CMA has powers to investigate and, where such abusive behaviour is found, to issue fines of upto 10% of an offending undertaking’s worldwide turnover.
The normal procedure is for the CMA is to send a subject undertaking written notice of investigation and orders to produce documents. However the CMA also has so – called ‘dawn raid’ powers and can arrive at your doorstep quite unannounced and demand entry, search premises and seize documents and equipment.
LLB, LLM, Solicitor, Barrister, MCIArb.