PURCHASE, N.Y. - In a possibly precedent setting decision,MasterCard International has convinced a Federal Court to dismissallegations that its policy of assessing additional charges onmerchants who have an excessive number of chargebacks on theirMasterCard accounts is illegal. MasterCard lawyers say the win mayinfluence two other similar cases and represents the first timesince the two Card brands settled with merchants that a federalcourt has found against plaintiffs who have charged that aMasterCard policy is anti-competitive. "MasterCard is pleased thatthe court agreed that the plaintiff, an aggregator of paymentservices, failed to demonstrate that the policies at issue in thiscase harm competition. The judge also recognized that the plaintiffhas multiple options for accepting payment, and could choose not toparticipate in our network," said Eileen Simon, MasterCardassociate general counsel. The complaint originated with PayComBilling Services, a credit card billing aggregator, many of whoseclients are distributors of online pornography. PayCom alleged inits suit that MasterCard's policy of charging higher fees tobusinesses with significantly higher than average chargebacks madeits business, and theirs, less competitive. Simon countered thatMasterCard charges higher fees for greater than average chargebacksbecause greater than average chargebacks are one key indicator offraud. "Our responsibility is to protect our issuers and thebusinesses that have reasons to use our chargeback feature," Simonsaid. As an industry adult oriented Internet sites have anotoriously high chargeback average, according to ecommerceexperts. Simon said that MasterCard found the decision especiallyencouraging because Judge David Trager recognized the distinctionbetween a policy which hurt competition and could be consideredanti-competitive and a policy which merely hurt an individualfirm's ability to compete. The court's ruling recognized thatPaycom is free to stop accepting MasterCard on behalf of itsclients, or to urge its clients' customers to pay with otherpayment cards. The judge ruled that the plaintiff could notdemonstrate that MasterCard's policies harmed competition. "We arepleased that Judge Trager recognized that antitrust laws aredesigned to protect competition, not individual competitors," Simonsaid.