4 ms·

Depends on how you try and reason about this; The fact that there was no clear definition doesn't mean it wasn't excessive beforehand, just that the definition

by Eridrus 10y ago

Depends on how you try and reason about this; The fact that there was no clear definition doesn't mean it wasn't excessive beforehand, just that the definition wasn't clear. To the extent that this doesn't request damages beyond the fees collected, you could interpret this as a decade-long interest free loan to Mastercard. Obviously that's a bit of a facetious interpretation, but the fact that something wasn't spelled out as illegal doesn't mean it wasn't wrong. Of course business prefer to get away with as much as they can, but there's no reason we have to accept this as the way things should be.

marcoperaza 10y ago
"Get away with"? We're talking about market pricing decisions. There's no morality involved. Is every business in the EU supposed to be worried about violating some undefined threshold of "excessive profit"?
- Eridrus 10y ago
  "Market pricing decisions" are not exempt from moral judgements. See: recent medical pricing scandals in the US; Martin Shkreli/Daraprim, Mylan/Epi-Pen Mastercard isn't really in the same bucket, but we do have anti-monopoly/anti-trust measures which aren't particularly well defined and seem pretty applicable here.
  - MichaelBurge 10y ago
    MasterCard or Visa aren't a monopoly/duopoly. At most, there's some inertia getting people to switch. The banks had the same problem getting people to use them in the first place, and it's a solvable problem if Visa decided to abuse its power. They aren't comparable at all to the old railroad, steel, and oil companies. Credit cards are an extension of the idea of a promissory note - a piece of paper with "I agree to pay you $X" written on it. It's way more practical for businesses to not use them to process payments than it is to quit using oil, or to quit using the railroads.
    - neokrish 10y ago
      Absolutely incorrect. If it was that easy, things would've changed long back and you would've named more companies than MasterCard / Visa. One simple logical case in point - MasterCard and Visa have such a strong investment in their infrastructure, there are multiple levels of redundancies built in to such a degree that you never hear Mastercard or Visa networks going down. Try doing that for any other firm. Why, just this morning, there was another thread on HN about a game developer suing a service provider for not keeping their systems online. What this enormous investment in infrastructure offers is 'trust'. Trust to financial institutions, merchants and customers. See Dwolla and Rupay as examples of alternative interchanges (Dwolla isn't one, but is trying to disrupt ACH and is similar in spirit). See if they can scale and promise that to the whole world payment traffic. Lastly, talk to anyone entrenched in business about payments and they'll refer to MasterCard and Visa as 'rails'. That's for a reason.
      - MichaelBurge 10y ago
        What about all the new mobile payment services? Apple Pay, Android Pay, Samsung Pay, the Walmart one? I don't use any of them - I have a prepaid cell phone that lays on my desk 100% of the time, and is for emergency purposes only - but even if they were backed by Visa or MasterCard, it seems like they could be backed by a checking account just as easily. Visa or MasterCard have value from inertia(all the work they did getting everybody to sign up for their cards), from their relationships with the banks(the banks tried and failed to do the same thing), from their ability to process payments worldwide, and from their infrastructure. It's not clear to me what prevents Google from taking over if Visa started abusing its power. They have the inertia(everyone has a cell phone, though not the habit of paying with it), they have the infrastructure, I think cell phones work internationally, and they're big enough to develop a relationship with any bank. To be clear, Visa and MasterCard are going to be extremely difficult to replace in the 'plastic payment cards' business no matter what they do. But not the more general 'electronic payment methods tied to bank services' business.
        Eridrus 10y ago
        You say inertia, I say network effects. The fact that network effects arise naturally doesn't mean we should be ok with those barriers to competition. The fact that Apple/Google/Samsung have failed to make a serious dent should be a good indication that there are real barriers to entry.
  - marcoperaza 10y ago
    What's funny is that there's a generic alternative to Epi-Pens called Adrenaclick that works just as well, but that the politicians at the FDA and other agencies have put roadblocks in front of. I have no problem with Mylan raising their prices. If they were the only option, then I think the government would have a case for exercising control on price. But this is just politicians screwing up and trying to blame Mylan.
- antisthenes 10y ago
  > Is every business in the EU supposed to be worried about violating some undefined threshold of "excessive profit"? Every business in the world should be worried about making "excessive profit" if that profit comes from a duopoly or a monopoly.
- hangsi 10y ago
  Only the companies invested in low-competition markets with monoplistic tendencies need to worry. This is framed as an anti trust case, which means that the abuse of privelidged market position is the issue - not the company's profit in and of itself as you suggest.

by Eridrus 10y ago

marcoperaza 10y ago

"Get away with"? We're talking about market pricing decisions. There's no morality involved. Is every business in the EU supposed to be worried about violating some undefined threshold of "excessive profit"?

Eridrus 10y ago
"Market pricing decisions" are not exempt from moral judgements. See: recent medical pricing scandals in the US; Martin Shkreli/Daraprim, Mylan/Epi-Pen Mastercard isn't really in the same bucket, but we do have anti-monopoly/anti-trust measures which aren't particularly well defined and seem pretty applicable here.
- MichaelBurge 10y ago
  MasterCard or Visa aren't a monopoly/duopoly. At most, there's some inertia getting people to switch. The banks had the same problem getting people to use them in the first place, and it's a solvable problem if Visa decided to abuse its power. They aren't comparable at all to the old railroad, steel, and oil companies. Credit cards are an extension of the idea of a promissory note - a piece of paper with "I agree to pay you $X" written on it. It's way more practical for businesses to not use them to process payments than it is to quit using oil, or to quit using the railroads.
  - neokrish 10y ago
    Absolutely incorrect. If it was that easy, things would've changed long back and you would've named more companies than MasterCard / Visa. One simple logical case in point - MasterCard and Visa have such a strong investment in their infrastructure, there are multiple levels of redundancies built in to such a degree that you never hear Mastercard or Visa networks going down. Try doing that for any other firm. Why, just this morning, there was another thread on HN about a game developer suing a service provider for not keeping their systems online. What this enormous investment in infrastructure offers is 'trust'. Trust to financial institutions, merchants and customers. See Dwolla and Rupay as examples of alternative interchanges (Dwolla isn't one, but is trying to disrupt ACH and is similar in spirit). See if they can scale and promise that to the whole world payment traffic. Lastly, talk to anyone entrenched in business about payments and they'll refer to MasterCard and Visa as 'rails'. That's for a reason.
    - MichaelBurge 10y ago
      What about all the new mobile payment services? Apple Pay, Android Pay, Samsung Pay, the Walmart one? I don't use any of them - I have a prepaid cell phone that lays on my desk 100% of the time, and is for emergency purposes only - but even if they were backed by Visa or MasterCard, it seems like they could be backed by a checking account just as easily. Visa or MasterCard have value from inertia(all the work they did getting everybody to sign up for their cards), from their relationships with the banks(the banks tried and failed to do the same thing), from their ability to process payments worldwide, and from their infrastructure. It's not clear to me what prevents Google from taking over if Visa started abusing its power. They have the inertia(everyone has a cell phone, though not the habit of paying with it), they have the infrastructure, I think cell phones work internationally, and they're big enough to develop a relationship with any bank. To be clear, Visa and MasterCard are going to be extremely difficult to replace in the 'plastic payment cards' business no matter what they do. But not the more general 'electronic payment methods tied to bank services' business.
      - Eridrus 10y ago
        You say inertia, I say network effects. The fact that network effects arise naturally doesn't mean we should be ok with those barriers to competition. The fact that Apple/Google/Samsung have failed to make a serious dent should be a good indication that there are real barriers to entry.
- marcoperaza 10y ago
  What's funny is that there's a generic alternative to Epi-Pens called Adrenaclick that works just as well, but that the politicians at the FDA and other agencies have put roadblocks in front of. I have no problem with Mylan raising their prices. If they were the only option, then I think the government would have a case for exercising control on price. But this is just politicians screwing up and trying to blame Mylan.
antisthenes 10y ago
> Is every business in the EU supposed to be worried about violating some undefined threshold of "excessive profit"? Every business in the world should be worried about making "excessive profit" if that profit comes from a duopoly or a monopoly.
hangsi 10y ago
Only the companies invested in low-competition markets with monoplistic tendencies need to worry. This is framed as an anti trust case, which means that the abuse of privelidged market position is the issue - not the company's profit in and of itself as you suggest.