Wellington  - New Zealand's business watchdog Commerce Commission said Monday that legal action against banks and credit card companies had broken an anti-competitive agreement and would save retailers and consumers millions of dollars.

The commission said it dropped High Court proceedings after the companies agreed to new arrangements "ushering in a new competitive landscape for the credit card industry in New Zealand."

It announced separate agreements with seven banks and financial institutions after earlier reaching a settlement on new rules with Visa and MasterCard which reduce credit card fees.

The commission had accused the companies of breaching the Commerce Act by implementing Visa and MasterCard rules which substantially lessened competition by artificially inflating the cost to retailers of accepting credit cards. This ultimately raised prices to consumers.

The commission estimated that retailers would save 70 to 80 million New Zealand dollars (50-58 million US dollars) over the next three years as a result of the new agreements.

"This represents a significant reduction in the cost of doing business for retailers who offer credit card payment options, and we would expect to see this passed on to consumers over time through lower retail prices," a statement said.

The settlements were with The ANZ National, ASB, Westpac New Zealand Ltd, Bank of New Zealand, Kiwibank/New Zealand Post and TSB banks and The Warehouse Financial Services Limited.

Commission chairman Mark Berry said similar organisations in other countries had shown a lot of interest in the settlements.

He said Visa and MasterCard had paid 5.6 million New Zealand dollars towards costs of the action and the banks would contribute another 1 million New Zealand dollars.

New Zealanders bought 25 billion New Zealand dollars worth of goods and services on their Visa and MasterCards last year. (dpa)