PURCHASE, N.Y. – In a move which could have an impact on the coming U.S. debate on card interchange, one agency of the British government has reversed another agency and ruled that MasterCard's method of setting credit card interchange does not violate the competition laws of the United Kingdom or the European Union. The reversal came about after MasterCard appealed a September 2005 decision by the Office of Fair Trading that its interchange practices did violate the law to the Competition Appeal Tribunal. The Tribunal then agreed with the card brand. "We applaud the CAT's action to quash the OFT Decision, rendering it a nullity-without force or effect. MasterCard has always maintained that these interchange fees, and the manner in which they were established, were entirely lawful because, among other things, they enabled MasterCard's credit card business in the UK to compete effectively with other payment providers," said Noah Hanft, MasterCard's general counsel. "MasterCard believes that the OFT's unprecedented action of abandoning a case after having issued a negative decision is testament to the strength of MasterCard's position," he added. Hanft noted that, over the course of the now concluded appeal, the OFT had already abandoned important parts of its September 2005 Decision. In particular, while consistently maintaining that it believes MasterCard interchange fees are too high, the OFT had acknowledged that it is necessary for a four-party payment system operating with an "honor all cards" rule to establish default terms of reference between card issuers and merchant acquirers. Observers note that the impact of the decision is unclear since it took place in a foreign venue, but both the major card brands and their critics have occasionally cited overseas cases as examples of what needed or could be done in the regulation of how interchange is set.