The European Commission antitrust watchdog launched the new case after a two year investigation into the world's No. 2 card and debit card issuer and is part of efforts to trim such fees and boost cross-border trade.

The EU antitrust regulator said on Thursday that the high level of interchange fees charged on cards issued outside the EU - the fees store owners pay banks to process credit card payments - were "unjustified".

When a Spanish credit card is used in a Brussels store, for example, the bank used by the Belgian shop owner has to pay the bank in Spain a percentage of the transaction.

The EU watchdog says that in the case of a Chinese card being used in a Brussels store, the bank used by the shop owner could have to pay fees up to five times higher.

"As these inter-regional fees represent hundreds of millions of euros each year, the Commission is concerned that these high inter-regional fees increase prices for retailers and may in turn lead to higher prices for products and services for all consumers, and not only those using cards issued outside the EU or paying with cards," it said.

The Commission said on Thursday that it had sent a charge sheet known as a statement of objections to the company.

LOGICAL CONSEQUENCE

Regulators on both sides of the Atlantic have waged lengthy battles against such interchange charges.

The EU has already taken MasterCard to task over its cross-border interchange fees within Europe. MasterCard capped those fees in 2009 after the EU competition enforcer said the high level of charges breached antitrust rules.

Brussels also said on Thursday in its statement of objection that MasterCard's rules prevented banks in one EU country from offering lower interchange fees to a retailer in a second EU country where interchange fees may be higher.

"We have concerns both in relation to the rules MasterCard applies to cross-border transactions within the EU, as well as the fees charged to retailers for receiving payments made with

cards issued outside Europe," European Competition Commissioner Margrethe Vestager said in a statement.

MasterCard said: "We will be formally responding to the statement of objections and are also working with the European Commission on the issue as part of an ongoing constructive dialogue."

EuroCommerce, whose members include retailers Carrefour, Marks & Spencer, Lidl and Ikea [IKEA.UL], welcomed the Commission's action.

"This is a logical consequence of the first MasterCard case, this is just unfinished business," Director-General Christian Verschueren said.

"We believe fees should be capped in the same way as the legislation or even lower. Debit card fees should be lower. The gains will be passed onto consumers via lower prices."

EuroCommerce's 1997 complaint triggered the first EU investigation into MasterCard. The Commission is also probing Visa International's inter-regional card fees.

The EU agreed last year to cap fees at 0.2 percent of the value of a purchase paid with debit cards and to 0.3 percent for credit cards, which will come into effect on Dec. 9.

(Editing by Elaine Hardcastle and David Clarke)

By Foo Yun Chee and Julia Fioretti