The court ruling could spur EU antitrust regulators to pursue other card companies such as Visa Europe, the European licensee of Visa Inc (V.N), over its credit and deferred debit card fees.

The EU ban, introduced in 2007, aims to break down barriers to e-commerce and cut costs for businesses in the 27-country European Union.

EU Competition Commissioner Joaquin Almunia said earlier this month that fees on card transactions were too high.

Almunia told Reuters in January that he was readying formal charges against Visa Europe but had not decided when to notify the company.

In a December 2007 decision, the Commission had said MasterCard's cross-border multilateral interchange fee (MIF) levied on retailers' credit and debit card transactions breached EU antitrust rules and had to be changed.

The world's second-largest credit and debit card network then took the case to the General Court in Luxembourg, Europe's second-highest.

"The General Court confirms the Commission's decision prohibiting the multilateral interchange fees applied by Mastercard," judges said.

"The methods of setting the MIF tended to overestimate the costs borne by the financial institutions on issuing payment cards and, moreover, inadequately to assess the advantages which merchants derive from that form of payment."

"This is an excellent result for retailers in Europe, for businesses and consumers," said Christian Verschueren, Director General of EU retail lobby EuroCommerce.

Ahead of the verdict, MasterCard decided to settle with the regulator in April 2009, by halving its fees to avoid penalty payments for not complying with the EU decision.

Cross-border credit and debit card fees account for 3 to 5 percent of the value of all card transactions in western Europe, according to MasterCard.

MasterCard made $682 million in net income in the first quarter, up 21 percent, thanks to higher consumer spending with cards [ID:nL1E8G225I].

MasterCard was not immediately available to comment on the ruling.

Visa Europe, Europe's largest card network, cut its debit card charges in December 2010 to settle the Commission's investigation into this part of its business, which followed a complaint by EuroCommerce.

The case is T-111/08, MasterCard and others v. European Commission.

(Reporting by Foo Yun Chee.; Editing by Charlie Dunmore and Jane Merriman)

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