As expected, Antitrust Authority Dror Strum today declared Bank Hapoalim's (LSE:BKHD; TASE:POLI) credit card company, Isracard, a monopoly in clearing Isracard and Mastercard credit cards.
Strum said he would act to open the Isracard and Mastercard markets to competition, and that he was prepared to use monopoly regulations to open the clearing of these credit cards to other companies.
Strum said there was clear evidence that Isracard benefited from market power vis-à-vis businesses, most of which felt obligated to honor Isracard and Mastercard credit cards, because they accounted for almost half of all credit card transactions in Israel.
"The real practical chose facing a business that wants to bargain with Isracard is not to honor its credit card. Obviously, this option is not practical for most businesses, because it means losing a very large part of Israeli customers," said Strum.
In contrast to the clearing of the other leading credit card in Israel, Visa, which businesses can choose to clear with either Leumicard and Israel Credit Cards-Cal (ICC-Cal), Isracard has had exclusivity in clearing its brands for years, forcing businesses to sign clearance agreements with it.
An Isracard spokesman said in response that the company was studying Strum's decision.
Published by Globes [online], Israel business news - www.globes.co.il - on May 22, 2005