Re EFTPOS Interchange Fees Agreement

The parties involved in this decision were the Australian Competition and Consumer Commission (ACCC) and the financial institutions involved in the EFTPOS interchange fees agreement. The dispute centered around whether the proposed agreement, which aimed to set interchange fees for electronic funds transfer at point of sale (EFTPOS) transactions, should be authorised under the competition and consumer legislation. The matter was heard by the Australian Competition Tribunal (ACT). The legal issues that the tribunal was required to decide included whether the proposed agreement would result in significant benefits to the public, whether the public benefits would outweigh the detriments, and whether the agreement would lead to increased use of EFTPOS by consumers. Additionally, the tribunal had to consider the potential flow-on effects of the agreement on consumer costs.

The tribunal concluded that the public benefits of the proposed agreement were not finely balanced with the detriments, as argued by the ACCC. The tribunal found that there was insufficient evidence to support the claim that the agreement would result in significant increased use of EFTPOS by consumers. They highlighted the lack of satisfactory evidence regarding the pass-on of benefits to cardholders, the signalling of benefits to cardholders, and the resultant choice by cardholders of EFTPOS over credit cards. Furthermore, the tribunal emphasised that encouraging a switch from credit cards to debit cards was not warranted on allocative efficiency grounds, as they are different products. The tribunal also noted that a switch to debit cards was already occurring due to the Reserve Bank of Australia's reforms. The tribunal found that the proposed agreement was likely to result in a flow-on of costs to consumers, with an estimated annual cost of $170 million, or a substantial part thereof, being passed on to the general body of consumers. This cost had previously been incurred within the banking system and recovered from bank customers. The tribunal did not see any public benefit in allowing this change to occur through a per se unlawful agreement.

In light of the above findings, the tribunal decided that the authorisation for the proposed agreement should be set aside. The tribunal concluded that the detriments of the agreement clearly outweighed any potential public benefits. They also expressed concern about the potential flow-on effects of the agreement on consumer costs. The tribunal's decision was based on a careful consideration of the evidence presented and the legal principles relevant to the case. The final orders of the tribunal were that the authorisation for the proposed agreement should be set aside, effectively preventing the agreement from being implemented.