PART 1: MARKET STRUCTURE & COMPETITION IN AUSTRALIA

In 2022, the Australian Competition Consumer Commission (ACCC) launched Federal Court proceedings against Mastercard alleging this company engaged in anti-competition behaviour since late 2017. ACCC alleged Mastercard entered into agreements with more than 20 major retailers by tying the offer of discounted payment processing fees for credit card transactions to a commitment from these retailers to process all or a majority of their Mastercard-eftpos debit card transactions through the Mastercard network instead of its competitor's eftpos network owned by Eftpos Payments Australia Limited (EPAL).

Questions

1.1 Research and write up the background on this case study. Identify and describe the market structure that Mastercard & EPAL have been operating in.

1.2 Conduct an economic analysis on the ACCC's concerns and rationale behind its decision to launch legal action against Mastercard. In addition, identify and explain who is the likely winner and loser from Mastercard's alleged anti-competition behaviour (Note: include market structure, competition policy, firm behaviour, consumer surplus, producer surplus, deadweight loss and market efficiency in your group analysis in this assignment report).

1.3 If Mastercard purchased and merged with Eftpos Payments Australia Limited (EPAL) and Visa to become a dominant player in the payment processing market, illustrate and explain using a diagram the impact this acquisition and merger has on price, quantity and deadweight loss as compared to the market structure identified in Q1.1.