CORRECTED - UPDATE 2-Visa, MasterCard get Hungary cartel fine

(Corrects first bullet point and paragraph 1 to read "Visa Europe" instead of "Visa")

* Visa Europe, MasterCard each fined $2.6 mln

* OTP, other Hungarian banks also fined

* Card companies, banks formed card interchange fee cartel

* Card firm, banks deny wrongdoing, promise appeal

(Updates with company reaction)

By Balazs Koranyi

BUDAPEST, Sept 24 (Reuters) - Hungary's competition authority, the GVH ruled on Thursday that Visa Europe, MasterCard (MA.N) and the country's top commercial banks formed an illegal bank card interchange-fee cartel that inhibited competition.

The GVH fined MasterCard and Visa Europe 477 million forints ($2.6 million) each and levied a combined fine of 968 million forints on the country's top commercial banks, Tihamer Toth, chairman of the GVH ruling panel, told a news conference.

Both card firms as well as OTP denied any wrongdoing and promised to launch an appeal as soon as they received a written copy of the decision.

"We concluded that the financial institutions under investigation, by creating a uniform interchange-fee structure, ... and by maintaining and supporting such a free structure, inhibited competition," Toth said.

"Therefore competition between the two card firms and the card-accepting banks was distorted and limited," Toth said.

OTP Bank OTPB.BU, the country's top commercial bank, received a 281 million forint fine, the biggest among banks as the GVH distributed fines in part based on market share.

FIRMS DENY WRONGDOING

"During the relevant period, Visa did not set interchange in Hungary and we do not consider there can be any credible legal basis for the finding of an infringement against Visa Europe or the imposition of a fine," Visa Europe said in a statement. "We are confident that this decision will be overturned on appeal to a higher court." Visa Europe is owned by banks, and is not a unit of Visa Inc. (V.N)

Milan Gauder, MasterCard's regional director for Hungary, Croatia and Slovenia also said his firm plans an appeal as they disagree with the ruling.

OTP deputy chief executive Antal Kovacs added: "We disagree with this decision; none of the watchdog's arguments are valid."

"We'll pay the fine but will take the necessary legal action," Kovacs said.

Budapest Bank, a unit of General Electric (GE.N), received a 188 million forint fine, K&H Bank, a unit of Belgium's KBC (KBC.BR), was fined 127 million forints while and (ERST.VI) was fined 107 million forints.

None of the other financial firms could immediately comment.

The GVH said banks and the two card companies struck a deal in 1996 to charge a uniform interchange fee for card transactions, which directly led to a uniform-fee structure paid by retailers to banks over card payments.

"But this fee should have been the most important condition for competition between card-accepting banks," Toth said. (Additional reporting by Marton Dunai; Editing by John Stonestreet and David Holmes) ($1=184.38 Forint)