Antitrust Law Daily Wrap Up, ANTITRUST—D. Mass.: Court cuts up antitrust suit against Mastercard, (May 8, 2025)

By Martin A. Steinberg, J.D.

Mastercard allegedly withheld access to its MDES service, which would have enabled OV Loop to offer payment processing for Mastercards.

The federal court in Boston, Massachusetts granted Mastercard Inc.’s motion to dismiss claims that the credit card company withheld access to a service that would have enabled OV Loop to offer processing for payments made with Mastercard-branded credit and debit cards on OV Loop’s mobile wallet platform. The court held that OV Loop had not alleged that MDES is an “essential facility” such that Mastercard’s refusal to certify OV Loop constituted anticompetitive conduct under Section 2 (OV Loop, Inc. v. Mastercard Inc., No. 1:24-cv-10412-IT (D. Mass. May 7, 2025)).

Background. Mastercard’s network allows merchants to route credit card transactions from their point of sale to the bank. It also operates as a token service provider, which permits digital or mobile card use to conduct transactions. This platform is called the Mastercard Digital Enablement Service (MDES). Mastercard controls token access; only approved mobile wallet providers can use the MDES platform. OV Loop’s digital platform provides users multiple payment rail options for purchases, including Mastercard’s payment processing network.

In late 2018, OV Loop approached Mastercard to obtain certification to enable Mastercard-branded cards on OV Loop’s mobile wallet platform. During its attempts to get certified to use Mastercard tokens, OV Loop completed Mastercard paperwork, provided Mastercard with the requested documents, and answered Mastercard’s questions. Mastercard had expressed excitement about OV Loop and looked forward to working together, and it never outright denied OV Loop approval. OV Loop was sending the requested information to Mastercard as recently as 2022. However, despite years of discussions, OV Loop had not received access to Mastercard’s token service or its MDES development and testing environment. In contrast, Samsung Pay received access and certification for MDES within about six months. In 2022, OV Loop realized that Mastercard was effectively refusing to certify OV Loop for MDES.

On February 21, 2024, OV Loop sued Mastercard for violations of Section 2 of the Sherman Act. OV Loop alleged that Mastercard was refusing to allow OV Loop’s use of Mastercard’s MDES tokenization service as a means to exert control over mobile wallet payment platforms and to squeeze out competition in the payment marketplace. Mastercard filed a motion to dismiss, with OV Loop responding by filing an Amended Complaint asserting the same one-count claim for violations of Section 2 of the Sherman Act but removing, among other things, much of the factual background related to OV Loop’s technology.

The Amended Complaint asserted claims under Section 2 of the Sherman Act for: unlawful monopolization through refusal to deal (Claim I), unlawful attempt to monopolize by refusal to deal (Claim II), through a denial of access to an essential facility (Claim III), denial of access to an essential facility (Claim IV), through maintenance of a monopoly (Claim V), and anticompetitive conduct (Claim VI).

Mastercard filed a renewed Motion to Dismiss. Mastercard had also filed motions to transfer the case to New York and to stay discovery pending a decision on its motion to dismiss. The court denied the motion to transfer the case but granted Mastercard’s motion to stay discovery. Mastercard had sought to transfer the antitrust action to the Southern District of New York because OV Loop has a patent infringement action against Mastercard pending there. The court noted that the venue for the patent suit was based on a different venue provision—28 U.S.C. § 1400—than was applicable in the Massachusetts case.

Unlawful monopolization. The court found that OV Loop had not alleged that MDES is an “essential facility” such that Mastercard’s refusal to certify OV Loop constitutes anticompetitive conduct under Section 2. OV Loop’s inability to offer a mobile wallet platform that provides payment processing for Mastercard-branded cards may inhibit its platform's growth. However, OV Loop has not sufficiently alleged that MDES is “essential” to offering “mobile wallet contactless payments network processing services on behalf of banks,” where OV Loop alleges it has a path to access tokenization services for at least one widely used alternative.

Because a Section 2 claim requires that the defendant exercises a threshold level of market power, such claims typically require defining a relevant market and showing that the defendant has a dominant market share. Consequently, at the pleading stage, the plaintiff must allege facts that plausibly delineate a relevant market.

Relevant markets. Plaintiff asserted two Relevant Product Markets, both with a geographic market of the U.S.: (1) “consumer-merchant mobile wallet contactless payments network processing services on behalf of banks,” or “C-M Mobile Payment Services,” and (2) “the U.S. market for point-of-sale universal mobile wallet payment network processing using Mastercard branded cards.” However, OV Loop’s Second Relevant Market was merely a subset of the First Relevant Market. This undermined any inference that payment processing services in the Second Relevant Market are not interchangeable with those in the first. OV Loop did not distinguish mobile wallet payment processing services provided by Visa or other card issuers, such that they are not reasonably interchangeable with MDES for mobile wallet providers, particularly where OV Loop has alleged that Visa is a principal player in the First Relevant Market. Consequently, OV Loop’s Second Relevant Market definition failed for purposes of analyzing its Section 2 claims.

Monopoly power. OV Loop failed to allege that Mastercard has monopoly power in the First Relevant Market. “Market power is the ability to raise prices above those charged in a competitive market. Ordinarily, monopoly power may be inferred from a defendant’s predominant share of the relevant market. A plaintiff may demonstrate market power by showing actual supracompetitive prices and restricted output.

OV Loop failed to allege that Mastercard possesses a market share that indicates it has monopoly power in the First Relevant Market. It alleged that as of 2022, 37.5% of credit cards in circulation worldwide were Mastercard cards, and that Mastercard’s market share as measured by card network purchase volume was 27.41%. Assuming these figures indicate Mastercard’s market share in the U.S. market for C-M Mobile Payment Services, OV Loop had not alleged that Mastercard has a predominant market share.

Market share is evidence of monopoly power rather than monopoly power itself. Therefore, OV Loop’s failure to allege that Mastercard has a particular market share was not fatal to its assertion that Mastercard possesses monopoly power. However, as the Second Circuit has explained, “while market share is not the functional equivalent of monopoly power, it nevertheless is highly relevant to the determination of monopoly power.” Tops Markets, Inc. v. Quality Markets, Inc., 142 F.3d 90, 98 (2d Cir. 1998). And in the First Circuit, a 70% to 90% market share is generally considered to indicate monopoly power.

OV Loop argued that Mastercard had been “adjudicated to possess market power independent of Visa,” citing United States v. Visa U.S.A., Inc., 344 F.3d 229 (2d Cir. 2003). There, the Second Circuit affirmed a finding that both companies, jointly and separately, have power within the market for network processing services. However, that case involved claims under Section 1 of the Sherman Act, which requires showing market power rather than monopoly power.

Anticompetitive conduct. Even if OV Loop had alleged facts supporting its claim that Mastercard possesses monopoly power within the First Relevant Market, the possession of monopoly power is not unlawful without accompanying anticompetitive conduct. Though OV Loop had not pleaded an explicit denial of MDES certification, OV Loop sufficiently alleged facts from which a jury could infer that Mastercard had refused OV Loop access to this service.

However, refusing to deal is not anticompetitive simply because it harms competitors. Instead, it may constitute anticompetitive behavior where the circumstances suggest an exclusionary intent. OV Loop had not alleged conduct that suggests Mastercard’s denial of access to MDES is exclusionary. OV Loop asserted that its use of MDES would provide Mastercard with additional profit, and Mastercard is forgoing this profit in refusing OV Loop MDES access. However, this allegation effectively alleged that Mastercard had rejected an offer from a potential customer. A finding that such an allegation is sufficient to support a Section 2 claim would negate the general rule that a private business may exercise its independent discretion in choosing parties with which to deal.

Essential facilities doctrine. The essential facilities doctrine “aims to prevent a firm with monopoly power from extending that power from one stage of production to another, and from one market into another.” Interface Grp., Inc. v. Massachusetts Port Auth., 816 F.2d 9, 12 (1st Cir. 1987). The Ninth Circuit has explained that a facility is only essential where it is otherwise unavailable. The Second Circuit has held that an essential facilities claim requires the plaintiff to show that an alternative to the facility is not feasible.

OV Loop’s inability to offer a mobile wallet platform that provides payment processing for Mastercard-branded cards may inhibit its platform's growth. However, OV Loop had not sufficiently alleged that MDES is “essential” to offering “mobile wallet contactless payments network processing services on behalf of banks,” whereas OV Loop alleged it has a path to access tokenization services for at least one widely used alternative. OV Loop asserted that it has a path to access Visa’s tokenization service, that Visa issues more cards than Mastercard, and that American Express and Discover provide tokenization services for the cards they issue.

Attempted monopolization. OV Loop failed to sufficiently allege that Mastercard’s denial of access to MDES constitutes attempted monopolization under Section 2. That section prohibits attempts to monopolize. The elements of attempted monopolization are (1) that the defendant has engaged in predatory or anticompetitive conduct, (2) with a specific intent to monopolize, and (3) a dangerous probability of achieving monopoly power. OV Loop alleged attempted monopolization claims based on a refusal to deal, denial of access to an essential facility, and a general attempted monopolization claim based on Mastercard’s refusal to grant MDES access.

The court explained that OV Loop failed to allege that Mastercard had engaged in anticompetitive conduct in withholding OV Loop’s certification to access MDES. Second, OV Loop failed to allege a “dangerous probability” that Mastercard’s denial will enable it to obtain monopoly power. Third, OV Loop failed to allege that Mastercard currently possesses monopoly power in large part because it has not alleged that Mastercard has a predominant share of the First Relevant Market.

Where OV Loop alleged that Visa-branded cards outnumber Mastercard-branded cards, it was not reasonable to infer that denying OV Loop the ability to process payments made with Mastercard-branded cards creates a dangerous probability that Mastercard will grow its share of that market and obtain monopoly power. This is particularly true where OV Loop alleged that it has a path to access Visa’s tokenization service. If anything, Mastercard’s market share would presumably decrease if OV Loop’s platform could process payments with Visa cards but not Mastercards.

The Case is No. 1:24-cv-10412-IT.

Judge: Talwani, I.

Lawrence G. Green McCarter & English, LLP) for OV Loop, Inc. Kenneth A. Gallo (Paul, Weiss, Rifkind, Wharton & Garrison LLP) for Mastercard Inc. and Mastercard International Inc.

Companies: Ov Loop, Inc.; Mastercard Inc.; Mastercard International Inc.

Cases: Antitrust MassachusettsNews