(BRUSSELS) - The European Commission said on Wednesday it had launched an anti-trust probe into payments card giant Visa Europe in case fees for cross-border transactions broke EU competition rules.

Europe's top anti-trust regulator said the in-depth investigation would specifically target so-called interchange fees which banks charge on payments made at retail outlets.

"If the multilateral interchange fee is set too high or if there are insufficient benefits passed onto consumers then consumers can end up paying higher prices," commission spokesman for antitrust issue Jonathan Todd said.

A spokesman for Visa Europe, which is independent of San Francisco-based Visa Inc., said the launch of the probe was "a standard procedural step" and it defended the use of interchange fees.

"We see no evidence that Visa Europe's interchange has acted as a tax on consumption or has caused consumers to pay twice," he said.

"The net result of a substantial reduction in interchange would see a disproportionate shift in the costs of the card payments system from retailers to consumers," the spokesman added.

The probe, which has no specific deadline to be completed, would also look into Visa Europe's "Honour-All-Cards" policy on such transactions, which obliges retailers to accept all valid Visa-branded cards.

Todd said that the commission had concerns that the arrangement forced merchants to accept cards that charge higher fees.

He stressed that the commission's case was "at a very early stage", but if it found evidence that Visa Europe's practices thwarted competition it could impose a fine, require changes or both.

In December, EU antitrust regulators ordered Visa's arch-rival MasterCard Europe to scrap fees they consider unjustified on cross-border transactions or face hefty daily fines.

MasterCard decided earlier this month to fight the ruling with a court challenge.

After promising reforms in 2002, Visa Europe had an exemption from EU competition rules for its interchange fees but it expired at the end of 2007, prompting the new investigation into its practices.

"Our dialogue with the commission has always been constructive and we believe the best way forward would be to reach a new agreement with the commission," Visa Europe's spokesman said.

Since October Visa Europe, which is owned and governed by its 4,600 European member banks, has operated independently of US-based Visa Inc., which was floated on the New York Stock Exchange earlier this month.

Visa Europe is the exclusive licensee of Visa Inc.'s trademarks and technology in the European region.

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