By Foo Yun Chee
LUXEMBOURG (Reuters) - MasterCard lost its decade-long battle against a European Union ban on cross-border card fees as Europe's highest court on Thursday supported a broader regulatory drive to cut the cost of using payment cards.
While the court's decision applies only to MasterCard and the cross-border interchange fees retailers must pay when they accept credit and debit card transactions in Europe, it could encourage other regulators to take action and cap fees generally.
The Court of Justice of the European Union (ECJ) said that a lower court's decision in 2012 to uphold the European Commission's initial findings against MasterCard in 2007 was correct.
"The Court of Justice confirms the judgment of the General Court and thus validates the Commission's decision prohibiting the multilateral interchange fees applied by MasterCard," judges wrote in their ruling.
The world's second-largest credit and debit card company behind Visa came under regulatory fire more than a decade ago over its fees, which are a lucrative source of revenue.
Since the Commission's 2007 veto, MasterCard has reached a deal with regulators to cap fees for cross-border transactions within Europe at 0.2 percent for debit cards and 0.3 percent for credit cards.
MasterCard said it was disappointed with Thursday's decision but that it would not affect business.
"We will continue to comply with the decision as we have been doing for a number of years. This means we would maintain our European cross-border consumer interchange fees at a weighted average of 0.2 percent for debit and 0.3 percent for credit," the company's President Javier Perez said.
The ruling should spur European lawmakers and governments to agree to a Commission-proposed cap on credit and debit fees throughout the EU, which has been in limbo since it was unveiled last year, said Ruth Milligan of EU retail lobby EuroCommerce.
It was a complaint from EuroCommerce in 1997 that triggered the EU investigation into MasterCard.
The court verdict could also prompt Britain's Competition and Markets Authority to revive its examination of fees charged by MasterCard and Visa Europe for domestic card payments. The investigation was suspended pending the outcome of the EU case.
The case is C-382/12 MasterCard versus the Commission.
(Editing by David Clarke and David Goodman)